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Income Tax Appellate Tribunal, DELHI BENCHES: ‘C’, NEW DELHI
ORDER PER BEENA A PILLAI, JUDICIAL MEMBER Present Cross Appeals have been filed by assessee as well as revenue against order dated 30/03/15 passed by Ld.CIT(A),
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 Meerut for Assessment Year 2005-06 and 2006-07 on the following grounds of appeal: Assessment Year 2005-06 (Assessee’s appeal) “1. That the learned Commissioner of Income Tax (Appeals) (hereinafter referred to as 'Id.CIT(A)) has erred in law as well as on the facts of the case by confirming the addition of Rs.8,40,500/- towards alleged under reporting of sale receipts and the various findings and observations made are based on assumption and are devoid of supporting material on record and the submissions of the appellant have not been considered in right perspective thereof.
2. That without prejudice to above, the addition of Rs.8,40,500/- as confirmed by the Id.CIT(A) is totally unjust, unlawful and unwarranted and therefore deserves to be deleted.
3. The appellant craves leave to add, modify and/ or delete any grounds of appeal.”
Assessment Year 2006-07 (Assessee’s appeal) “1. That the learned Commissioner of Income Tax (Appeals) (hereinafter referred to as 'Id.CIT(A) has erred in law as well as on the facts of the case by confirming the addition of Rs.66,53,450/- as against Rs.77,25,950/- made by ld.AO towards alleged under reporting of sale receipts and the various findings and observations made are based on assumption and are devoid of supporting material on record and the submissions of the appellant have not been considered in right perspective thereof.
2. That without prejudice to above, the addition of Rs.66,53,450/- as confirmed by the Id.CIT(A) is totally unjust, unlawful and unwarranted and therefore deserves to be deleted.
3. The appellant craves leave to add, modify and/ or delete any grounds of appeal.” Page 2 of 19
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 Assessment year 2006-07 (Department’s appeal) “1. That Ld. CIT(A) has erred in law and on facts in giving the relief of Rs. 10,72,500/- out of the addition of Rs. 77,25,950/- made u/s 68 of IT Act 1961 on account of under reporting of income which has been received by the assessee in cash.
2. That Ld. CIT(A) has erred in law and on facts in not appreciate the fact that the difference of cash of Rs. 39,97,021/- was due to data gathered from laptop seized during search and cash as per books of account of the assessee with total disregard of the provision of section 292C of the IT Act.
3. That Ld. CIT(A) has erred in law and on facts in deleting the addition made by the A.O. on the basis of cash book as per laptop data without appreciating that the assessee did not give any satisfactory reply/ produce any supporting evidence with total disregard of the provision of section 292C of the IT Act.
4. That the order of the Ld. CIT(Appeals) being erroneous in law and on facts which needs to be vacated and the order of the A.O. be restored.
5. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so may arise.” Assessment year 2007-08 ITA No. 4011/Del/2015 (Department’s appeal) “1. Whether on facts and circumstance, the Ld.CIT(A) was correct in admitting the appeal of the assessee in view of S.249(4) (a) of IT
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 Act, 1961 when the assessee has failed to deposit the full tax on returned income.
2. That Ld. CIT(A) has erred in law and on facts in deleting the addition made u/s 68 of IT Act 1961 on account of under reporting of income which has been received by the assessee in cash.
3. That Ld. CIT(A) has erred in law and on facts in not appreciating the fact that the difference of cash was due to data gathered from laptop seized during search and cash as per books of account of the assessee with total disregard of the provision of section 292C of the IT Act.
4. That Ld. CIT(A) has erred in law and on facts in deleting the addition made by the A.O. on the basis of cash book as per laptop data where assessee did not give any satisfactory reply/ produce any supporting evidence with total disregard of the provision of section 292C of the IT Act.
That the order of the Ld. CIT(Appeals) being erroneous in law and on facts which needs to be vacated and the order of the A.O. be restored.
That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so may arise.” Assessment year 2008- (Department’s appeal) “1. That Ld. CIT(A) has erred in law and on facts in deleting the addition made u/s 68 of IT Act 1961 on account of under ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 reporting of income which has been received by the assessee in cash.
2. That Ld. CIT(A) has erred in law and on facts in not appreciating the fact that the difference of cash was due to data gathered from laptop seized during search and cash as per books of account of the assessee with total disregard of the provision of section 292C of the IT Act.
3. That Ld. CIT(A) has erred in law and on facts in deleting the addition made by the A.O. on the basis of cash book as per laptop data where assessee did not give any satisfactory reply/ produce any supporting evidence with total disregard of the provision of section 292C of the IT Act.
That the order of the Ld. CIT(Appeals) being erroneous in law and on facts which needs to be vacated and the order of the A.O. be restored.
5. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so may arise.”
Brief facts of the case for assessment year 2005-06 and 2006- 07 are as under: A search and seizure operation was carried out in the premises of assessee and site office. On examination of punchnama files and seized documents, notice under section 153A of the Income Tax Act, 1961 (‘the Act’ for short) was issued on 23/02/12, calling upon assessee to file its return of income. Assessee filed return
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 on 19/03/12 declaring total income of Rs.7,08,166/-. Accordingly notice under section 143 (2) was issued along with notice under section 142 (1) and questionnaire. It has been recorded by Ld.AO that on the date of hearing indicated in the notice, no one appeared on behalf of assessee. Thereafter various notices were issued, yet neither replies were filed nor any one appeared on behalf of assessee. Ld. AO records that assessee filed its 1st reply on 15/03/13 responding to few queries, wherein books of accounts were produced for verification. Ld.AO further records that Annexure-A-40-1 page 101-150 impounded from assessee’s site office as per which sale receipts to be underreported, and counter foils of cash receipts pertaining to period 29/03/05 to 20/06/05 were also seized. The Ld.AO observed that these cash receipts totalling to Rs.85,66,450/- were not reflected in cash book found in the IBM laptop seized from assessee’s site office. Ld.AO accordingly issued show cause as to why not the underreported sale receipts be treated as undisclosed income at Rs.8,40,500/- pertaining to Assessment Year 2005-06 and Rs.77,25,950/- pertaining to Assessment Year 2006-07. 2.1. The reply filed by assessee was found devoid of fact by Ld.AO, as many alleged receipts carried initials/signatures of Bajwa brothers or Sh.Gyanender, Accountant of assessee. Ld.AO therefore rejected reply of assessee, as receipt book were seized from assessee’s premises and were different from regular receipt book actually maintained by assessee. Ld. AO was of the opinion
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 that assessee failed to give satisfactory explanation for maintenance of two separate receipt books, as well as omission on behalf of assessee to record these receipts. Accordingly, Ld.AO concluded amount to be assessee’s undisclosed sale receipts under section 68 of the Act. Ld.AO made addition of Rs.8,40,500/-and Rs.77,25,950/- for Assessment Year 2005-06 and 2006-07 as undisclosed income under section 68 of the Act and a sum of Rs.39,97,021/-was added as unaccounted money under section 68 for assessment year 2006-07.
Aggrieved by the order of Ld. AO assessee preferred appeal before Ld. CIT (A) who partly deleted the additions.
4. Aggrieved by the order of Ld. CIT (A), assessee is in appeal before us now. 5. appeal for assessment year 2005-06 and 2006-07) Both parties submits that issues for A.Y. 2005-06 and 2006-07 are similar on identical facts. We are therefore dealing with these grounds raised in both the years together. Ld.AR submitted that documents seized were dumb documents, as the noting recorded on alleged receipts could not establish that unaccounted money has been received by assessee. He submitted that these documents independently nowhere lead to the conclusion that money has been received by assessee, out of books of accounts from undisclosed sources. 5.1. Ld.AR placed reliance upon photo copies of seized documents being alleged receipts purported to have been issued
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 on 29/03/05, 30/03/05 and 31/03/05 for Rs.1,20,000/-, Rs.70,500/- and Rs.6,50,000/-(for Assessment Year 2005-06) placed at pages 6-8 of paper book (for assessment year 05-06), and seized receipts totalling to 45 relating to Assessment Year 2006-07 amounting to Rs.66,53,450/-(details of which are placed at page 1-47 of paper book for Assessment Year 2006-07) which were compared with specimen of actual receipts from receipt book maintained by assessee, placed at page 5 of paper book. He submitted that alleged receipts do not bear name of assessee and also signatures of the person. It was submitted that, as a practice assessee issues proper receipts with printed numbers having assessee’s logo thereon. He submitted that Assessing Officer has not even cross verified the notings made on seized receipts, either from parties mentioned therein nor proceeded to make addition of total amount mentioned in alleged receipts. Ld.AR submitted that, in fact, Assessing Officer made addition of Rs.77,25,950/- as against amounts mentioned in the seized receipts totalling to Rs.66,53,450/-. 5.2. The Ld.AR further submitted that detailed reply was provided to Ld. AO during the assessment proceedings, listing names and amount received from parties for allotment of houses, units allotted, wherein constructions were going on, which is placed at page 50-55 of paper book for Assessment Year 2006-07. Ld.AR placed reliance upon decisions in support of his argument that charge cannot be levied on basis of seized documents when it does not speak about assessee or which ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 could be related to any other material found during the investigation/assessment/search. He submitted that document should be clear and unambiguous to form basis of addition. Jurisdictional Allahabad High Court judgment dated 17.02.2017 in CIT vs. Shri Yogendra Singh ITAT Delhi Bench judgment dated 25.07.2014 in ACIT vs. Shri Sharad Chaudhary CIT vs. Vatika Landbase P Ltd. (Del) 383 ITR 320 CIT vs. Anil Bhalla (Del) 322 ITR 191 5.3. On the contrary Ld.DR placed reliance upon the submissions filed before us in writing. He submitted that all the receipts/counter foils of cash receipts have been seized from the premises of assessee and that section 292C of the Act strengthens the presumption of such receipts belonging to assessee. He submitted that it was upon assessee to rebut that the presumption is wrong raised under section 132 (4A), as well as section 292C of the Act. It has been submitted by revenue that assessee should have produced other documents to disprove the entries made in the loose sheets and while saying so he placed reliance upon the following decisions: CIT vs. Naresh Kumar Aggarwala (2011) 331 ITR 510 (Delhi) Mahabir Prasad Rungta vs. CIT (2014) 43 taxmann.com 328(Jharkhand) Bhagheeratha Engineering Ltd. vs. ACIT (2017) 379 ITR 244 (Kerala) Ashok Kumar vs. CIT (2016) 386 ITR 342 (Patna)
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 Baldev Raj vs. CIT (2010) (P&H) 2 taxmann.com 355 6. We have perused the submissions advanced by both sides in the light of records placed before us. 6.1. Hon’ble Supreme Court in the case of P.R. Metrani vs. CIT reported in (2007) 157 Taxmann 325 has elaborated the scheme of Section 132 of the Act by stating that the section is a code in itself. It has been observed by Hon’ble Supreme Court that the Section has its own procedure for search, seizure, determination of the point in dispute, quantum to be retained and also the quantum of tax etc. Subsection (4A) was inserted by Amendment Act,1975 which permits the presumption to be raised in the circumstances mentioned therein. Before the insertion of the section (4A), the onus of proving that the books of account, other documents, money, bullion, jewellery etc found in possession or control of a person in the course of a search belongs to that person was on the Department. This subsection enables searching authority to raise a rebuttal presumption that such books of account, money bullion etc belonging to such person; that the content of such books of account and other documents are true, and the signatures and every other part of such books of account and other documents are signed by such person or are in the handwriting of that particular person. In the light of the presumption under section 132 (4A), the revenue contends that assessee ought to have produced other documents to disprove the entries made in the loose sheets but assessee has not ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 adduced any material for rebutting the presumption and therefore addition made by Ld.AO has been justified. 6.2. By placing reliance upon the decisions of Hon’ble Supreme Court in the case of CIT vs Durga Prasad More reported in 82 ITR 540 and Sumathi Dyal vs CIT reported in 214 ITR 801, it has been submitted that alleged receipts seized during search from the premises belonging to assessee should be appreciated from the standard of preponderance of probabilities. 6.3. Ld.AR has submitted that alleged receipts have been found lying in an inoperative site office of assessee pertaining to period from 29/03/05 to 20/06/05 which is around 5 ½ years before the date of search. It has also been submitted that Assessing Officer has not made addition of the entire amounts mentioned in alleged seized receipts pertaining to assessment year 2006-07 but has taken a different figure. It has also been argued that the receipts alleged to have been received by assessee has not been linked with any transaction actually entered into by assessee. Further from the paper book filed before us it is observed that assessee has provided the entire list of transactions and the details of various parties before the authorities below which is placed at page 50-55 of the paper book. He thus submitted that Assessing Officer has failed to fulfil his duties of examining the particulars regarding information received from assessee regarding the transactions entered into during the years under consideration.
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 Further from the records placed before us, it is apparent that Assessing Officer in the present case has not summoned Bajwa brothers or Sh.Gyanender, Accountant of assessee for examination to explain the alleged seized receipts. In fact assessee vide its written submissions provided Ld. AO with details of investors/allottees with whom assessee was transacting. Assessee also provided to Ld. AO the list of investors who were refused allotment due to default in payment. Ld. AO then could have examined the parties for the purposes of confirming the receipts that has been accounted by assessee as well as those parties whose names were appearing on the alleged receipts found during search. No doubt, the presumption under section 132 (4A) is first upon assessee to discharge its onus of rebutting the documents not belonging to, but once sufficient materials have been provided to assessing officer regarding the same, it was the duty of assessing officer to investigate upon the material/evidences in order to corroborate it with seized materials. It is very much apparent from records that no such investigations have been conducted by Ld.AO. Under such circumstances, we hold that the burden had shifted to revenue to show the basis of some reliable and tangible material which could indicate undisclosed receipts out of books of accounts in the hands of assessee.
At this juncture we do not wish to comment upon the documents seized are dumb or not. Ld. AO was in a much better position during assessment proceedings to investigate
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 upon the facts and to corroborate the materials obtained during the course of investigation with the seized materials. However now with the passage of time being almost 6 years from the date of search, relating to 6 assessment years prior to the date of search, we cannot improve upon what Ld.AO could have done himself. 7.2. On the basis of the above discussion we are inclined to delete the addition made by Ld. AO on account of alleged receipts of cash for assessment years 2005-06 and 2006-07. 7.3. Accordingly grounds raised by assessee in and 3227/Del/2015 for Assessment Years 2005- 06 and 2006-07 stands allowed.
8. In the result appeal filed by assessee for Assessment Years 2005-06 and 2006-07 stands allowed.
9. ITA No. 4010/Del/2015 (Revenue’s appeal for Assessment Year 2006-07) Ground No. 1 raised by revenue is in respect of the addition of Rs.10,72,500/-being deleted by Ld.CIT (A) out of total addition of Rs.77,25,950/- made under section 68 of the Act on account of underreporting of income received by assessee in cash. 9.1. This ground forms part of the ground raised by assessee for assessment year 2006-07. As we have deleted the entire addition in assessee’s appeal, this ground stands automatically dismissed.
10. Ground No. 2 Ld.DR submitted that during the course of search one laptop was seized from the premises of assessee which contained
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 Consolidated account for 6 years. It was submitted that the cash book maintained on the laptop had opening balance of cash at Rs.1,92,173/-while the closing balance was Rs.43,12,170/-. However, in the balance sheet filed before the assessing officer cash was shown at Rs.2,39,814/-. He submitted that therefore assessing officer was right in holding it as unreported cash amounting to Rs.40,72,356/-.
Ld.AR submitted that sales mentioned in the laptop data were not correctly recorded and did not contain opening and closing stock. It has been submitted that debit balance of losses appeared on asset side year after year, whereas, as per audited accounts, income declared in the return of income was profit. He submitted that Ld.AO while making addition towards difference in cash has considered data from IBM laptop partly which was unjust and uncalled for. Ld.AR submitted that assessing officer took wrong figures of cash balance as per IBM laptop, to be Rs.1,92,173/-, whereas the cash balance as per IBM laptop was (-) Rs.1,92,173/-. He submitted on observing the discrepancy Ld.CIT (A), deleted difference in cash balance that was computed by Ld.AO.
We have perused the submissions advanced by both the sides in the light of records placed before us. 12.1. It is very much relevant to record the observations of Ld. CIT (A) while deciding this issue which is as under: “5.3 I have considered the rival submissions as above. It is seen from the facts of the case that audited books of account were ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 produced before the AO. It is further seen that the AO has not made any adverse remark on any of account heads of the regular books of account. In other words, details of sales, purchases and other major expenses which have arrived as per the regular books of account have been accepted by the AO. In this situation, the moot question is why did the AO not accept the closing cash balance shown in the balance sheet filed before her. It appears that the AO thought that the data maintained on laptop represents a duplicate set of books of account in which correct state of affairs of appellant’s business is given. If this was indeed the fact then the data maintained in the laptop in its entirety should be accepted by the AO after rejecting the regular books of account. The AO did not do so because the data maintained in the laptop would have led to absurd results. This conclusion is reached on the basis of following facts: (i) The opening figure of consolidated cash book as on 01.04.2004 was negative. (ii) There were no details of sale and expenses during the year under reference and succeeding years. (iii) There were no details of opening and closing stock in the laptop data. (iv) The laptop data was showing losses year after while the appellant was showing profit as per the audited profit and loss account. The appellant had also filed positive return of income for the years in which loss was shown in the laptop data.
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 (v) Lastly, as per laptop data cash as on 09.09.2010 i.e. on the date of search should have been Rs. 11,48,70,080/-. However, no cash was found from the business premises while Rs. 82,655/- only was found from the residential premises of its directors. 5.4 After considering the totality of facts, I have come to a conclusion, that the laptop data cannot be regarded as duplicate set of books of accounts. Further, there is no justification for the AO to selectively consider the figures of cash book only and ignore all other details in the laptop data. In view of the above facts, the ground of appeal
No.2(ii) is allowed and addition of Rs. 39,97,021/- is deleted.”
13. From the above it is observed that receipts are neither entered in regular cash book nor in IBM laptop data and that the data received from laptop has been partly ignored by Assessing Officer. Further it is observed that Assessing Officer has wrongly taken cash balance as per IBM laptop as a positive figure as on the year ending 2005, whereas cash balance as per laptop was in negative which has been categorically observed by Ld. CIT (A). Thus Ld.AO failed to establish the laptop data to be a duplicate set of books of accounts maintained by assessee. Before us Ld. DR has also not been able to controvert these differences that have been categorically observed by Ld. CIT (A) by way of any material/evidences on record. Thus in our considered opinion we do not find any infirmity in the observations of Ld. CIT (A) in deleting the addition.
ITA Nos. 3226/Del/15 & 3227/Del/15 M/s Godwin Construction P Ltd. vs. ACIT A.Y. 2005-06 & 2006-07 – 4011 & 4012/Del/15 DCIT vs. M/s Godwin Construction P Ltd. A.Y. 2006-07, 2007-08 & 2008-09 13.1. Accordingly this ground raised by revenue stands dismissed.
14. In the result appeal filed by the revenue stands dismissed.
15. (Revenue’s appeal for Assessment Year 2007-08 and 2008-09) Both the parties admit that the grounds raised in these Assessment Years by revenue are identical to the grounds raised by revenue for Assessment Year 2006-07 and the observations by Ld.AO as well as by Ld. CIT (A) are identical.
16. As we have already upheld the order of Ld. CIT (A) for assessment year 2006-07, following the same discussion and rational, we do not find any infirmity in the observations of Ld. CIT (A) in deleting the addition.
17. Accordingly this ground raised by revenue for assessment year 2007-08 and 2008-09 stands dismissed.
18. In the result appeal filed by the revenue for assessment year 2007-08 and 2008-09 stands dismissed. To sum up appeal filed by assessee for Assessment Year 2005-06 and 2006-07 stands allowed and the appeals filed by revenue for Assessment Years 2006-07 to 2008-09 stand dismissed. Order pronounced in the open court on 08th June, 2018.