DCIT, CENTRAL CIRCLE-28, NEW DELHI vs. PSK FINANCE SOLUTIONS PVT. LTD., NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’, NEW DELHI Before Sh. Kul Bharat, Judicial Member Dr. B. R. R. Kumar, Accountant Member ITA No. 663/Del/2021 : Asstt. Year : 2016-17 DCIT, Vs. PSK Finance Solutions Pvt. Ltd., Central Circle-28, DPT 801, Plot No. F-79-80, DLF Prime New Delhi-110055 Tower, New Delhi-110020 (APPELLANT) (RESPONDENT) PAN No. AAGCP6657D Assessee by : Sh. Sanket Milind Joshi, CA Revenue by : Sh. Subhash Chandra, CIT-DR Date of Hearing: 06.03.2024 Date of Pronouncement: 15.05.2024 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the Revenue against the order of ld. CIT(A)-29, New Delhi dated 26.03.2021. 2. Following grounds have been raised by the Revenue:

“1. That on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,37,50,000/-, made by the AO, without appreciating the detailed reasons given in the assessment order and without appreciating the fact that cash seized from the premise which belongs to Sh. Jai Shiv Saxena. 2. That on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,37,50,000/-, made u/s 69A by the AO, without appreciating the fact Sh. Jai Shiv Saxena is constantly changing his statement just to circumvent the facts of the case.”

ITA No. 663/Del/2021 2 PSK Finance Solutions Pvt. Ltd. Sl. No. 1 Excerpts from Page 2 to 10 Assessment Order Sl No. 2 Submission of the Page 10 to 59 assessee before the ld. CIT(A) Sl. No.3 Observation of the Page 59 to 77 ld. CIT(A) Sl. No. 4 Conclusion Page 77 to 80

“A search action was carried out by the Economic Offence Wing CID, Bangalore on 05.08.2015 in M/s PSK Finance Solutions Pvt. Ltd. group. Based on the input, search u/s 132A of the I. T. Act was carried out on 08.08.2015. Various material/documents etc. were found and seized and statements of various persons were also recorded. The original return was e-filed u/s 139 of the Act on 20.03.2017, declaring an income of Rs.2,26,32,890/-, which was processed u/s 143(1) of the Act. Penalty proceedings u/s 271F of the Act are initiated for late filing of return of income. Notice u/s 143(2) of the Act was issued on 27.09.2017 and duly served upon the assessee.

ITA No. 663/Del/2021 3 PSK Finance Solutions Pvt. Ltd. Act of the Pr. Commissioner of Income Tax, Delhi-7, New Delhi bearing F. No. Pr. CIT-7/72/66/ Centralization/2017-18/994 dated 16.10.2017. Notice u/s 142(1) of the Act was issued to the assessee company on 17.10.2017. Notice u/s 142(1) of the Act alongwith questionnaire was issued to the assessee on 31.10.2017, asking for various relevant documents/particulars. The assessee company vide letter dated 15.11.2017 furnished the copy of return of income e-filed u/s 139 of the Act declaring an income of Rs.2,26,32,890/-. Notice u/s 143(2) and 142(1) of the Act (Specific questionnaire) was issued to the assessee on 04.12.2017. Further, notice u/s 142(1) of the Act was issued to the assessee on 22.12.2017.

ITA No. 663/Del/2021 4 PSK Finance Solutions Pvt. Ltd. 5. During the course of search operation carried out by Economic Offence Division, CID, Bangalore at Golden Grand Apartment, Maple Block, Flat No. MB 602, Yeshwantpur, Bengaluru cash amounting to Rs.4,37,50,000/- was found and seized. The statement of Sh. Atul Mohan, Director of the assessee company was recorded on 20.08.2015 on oath u/s 132(4) at C-69, Sector 30, Noida, UP, wherein, he has stated that the cash found and seized during the course of search operation belongs to the assessee M/s PSK finance Solutions Pvt. Ltd. and the same is not accounted in regular books of account of the assessee company. Further in the said statement he has also voluntarily agreed to offer to tax the cash found and seized amounting to Rs.4,37,50,000/- by taking into the books of accounts as income in addition to the regular income for the current financial year, i.e., Financial Year 2015-16. Further, he also agreed to pay the taxes as applicable as per the provisions of the Income tax Act. However, from the perusal of return of income filed for the year under consideration on 06.11.2017 in response to the notice u/s 153A of the Act dated 17.10.2017, such amount is not disclosed in the return and no tax has been paid on it.

4.………The relevant portion of the show cause is reproduced as below:

“.....2. A search action was carried out on the assessee on 08.08.2015 at Golden Grand Apartment, Maple Block,

ITA No. 663/Del/2021 5 PSK Finance Solutions Pvt. Ltd. Flat No. MB 602, Yeshwantpur, Bengaluru. During the course of search operation carried out by Economic Offence Division, CID, Bangalore at Golden Grand Apartment, Maple Block, Flat No. MB 602, Yeshwantpur, Bengaluru cash amounting to Rs.4,37,50,000/- was found and seized as per the details below:-

Sr.No. Premises Cash (Rs.) Found Seized 1. 602, MB, Maple Block, 43750000 43750000 Golden Grand, Bangalore 2.1. A Statement was recorded on oath u/s 132(4) of Sh. Atul Mohan, Director of the assessee company on 20.08.2015 at C-69, Sector 30, Noida, UP, wherein, he has stated in his sworn statement that the cash belongs to the M/s PSK finance Solutions Pvt. Ltd. and the same is not accounted in regular books of account. The relevant portion of the statement is reproduced below for reference:-

“Q.21 I am showing you the details of cash of Rs.4,37,50,000/- as per annexure C/PSK which was seized by the CID, Economic Offence Division, Bangalore during the search on 05 8s 06 August 2015 at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore which was subsequently seized by the Income Tax Department, Bangalore on 08.08.2015. Please give the details of owner of the same and also source for the same.

Ans: The cash of Rs.4,37,50,000/- seized at Flat No.602 MB, Maple Block, Golden Grand, Bangalore, is generated out of business activates carried out by M/s PSK Finance Solutions Pvt. Ltd., in and around Bangalore city which has not been accounted in the books of accounts of the

ITA No. 663/Del/2021 6 PSK Finance Solutions Pvt. Ltd. said company and also I am not in a position to produce any documentary evidence for the receipt of the same.

Q.22 As you are not able to substantive the source of cash of Rs.4,37,50,000/- which was seized by the CID, Economic offence Division, Bangalore during the search on 05 & 06 August 2015 at Flat No. 602 MB, Maple block, Golden Grand, Bangalore which was subsequently seized by the Income Tax Department, Bangalore on 08.08.2015, why the same should not be treated as unaccounted. Please give your comment of the same.

Ans: Sir, I am not in a position to produce the documentary evidence for generation of above seized cash, but I state here that the balance sheet of M/s. PSK Finance Solutions Pvt. Ltd. justified the fact that it was actively pursuing real estate both in Delhi NCR and Bangalore.

I therefore, voluntarily agree to offer to tax the cash seized of Rs.4,37,50,000/- by taking into the books of accounts as income in addition to the regular income for the current financial year, i.e. Financial Year 2015-16. I also hereby agree to pay the taxes as applicable as per the provisions of the Income tax Act.”

However, from the perusal of return of income for A.Y. 2015-16 filed on 06.11.2017 in response to the notice u/s 153A dated 17.10.2017, such amount is not disclosed in the return and no tax has been paid.

You are therefore requested to explain as to why an amount of Rs. 4,37,50,000/- be not added to your income for the F.Y. 2015-16 i.e. A.Y. 2016-17.”

ITA No. 663/Del/2021 7 PSK Finance Solutions Pvt. Ltd. 5.2. In response to this the assessee company furnished its reply vide letter dated 07.12.2017, wherein the assessee company stated that in the statement of Sh. Atul Mohan recorded on 20.08.2015 at C-69, Sector 30, Noida, U.P., at the time of recording of statement Sh. Atul Mohan was not in a position to produce any documentary evidence with respect to the cash. Further stated that at that point of time he was told to have no option but to offer it to tax and the statement was recorded accordingly which he never intended to do so without verifying with his Bangalore Counter Part Sh. Jai Shiv Saxena and further stated that the premises was under the control of Sh. Jai Shiv Saxena.

5.3. Further in its reply, the assessee company also reproduced the statement of Sh. Atul Mohan, Director of M/s PSK Finance Solutions Pvt. Ltd recorded on 20.08.2015 and 27.08.2015 (recorded after more than 2 weeks of search) and again stated that the cash found and seized is belongs to Sh. Jai Shiv Saxena, who is handling the real estate business of the assessee company. It is further stated in the statement that the said cash i.e. the cash found and seized during the course of search operation at the premises of the assessee company M/s PSK Finance Solutions Pvt. Ltd. at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore belongs to Sh. Jai Shiv Saxena which he derived from the sale of shares in cash to some NRI and the cash which

ITA No. 663/Del/2021 8 PSK Finance Solutions Pvt. Ltd. was found and seized belongs to him, which was kept at the Bangalore premises of the assessee company.

5.4. The reply of the assessee has duly been considered but not found acceptable and rejected in view of the following facts:-

i) During the course of search operation at Flat no. 602, MB Maple Block, Golden Grand Bangalore cash amounting to Rs. Rs.4,37,50,000/- was found and seized in the possession of the assessee company. In the statement of Sh. Atul Mohan Director of the assessee company in his sworn statement recorded u/s 132(4) of the Act on 20.08.2015 on oath u/s 132(4) at C-69, Sector 30, Noida, UP which is a residential premises of Sh. Atul Mohan, Director of the assessee company, Sh. Atul Mohan has voluntarily stated that the cash found and seized during the course of search operation belongs to the assessee company M/s PSK finance Solutions Pvt. Ltd. and the same is not accounted for in the regular books of account of the assessee company. Further in his sworn statement he has also voluntarily agreed to offer to tax, the cash found and seized amounting to Rs.4,37,50,000/- by taking into the books of accounts as income in addition to the regular income for the current financial year, i.e., Financial Year 2015-16. Further, in his sworn statement he also agreed to pay the taxes as applicable as per the provisions of the Income tax Act.

ITA No. 663/Del/2021 9 PSK Finance Solutions Pvt. Ltd.

ii) Further in the second statement of Sh. Atul Mohan which was recorded 27.08.2015 wherein he has stated that Sh. Jai Shiv Saxena is his family friend and was residing at Bangalore searched premises and was looking after the company operations at Bangalore from the flat. However, no supporting evidence that Sh. Jai Shiv Saxena was using that premises, has been furnished. Further, no supporting documentary evidence with respect to his nature of job, duties performed by him and position held in Assessee Company was furnished as Sh. Jai Shiv Saxena is neither a Director of the assessee company nor was holding any shares in the assessee company and was not also the employee of the assessee company. Moreover, the document, if any, furnished in this regard, the assessee failed to establish the authenticity of the same. Therefore, the assessee company failed to establish the connection between Sh. Jai Shiv Saxena and the assessee company.

iii) Although in his sworn statement Sh. Atul Mohan, Director of M/s PSK Finance Solutions Pvt. Ltd. himself admitted that the cash found and seized during the course of search operation at Bangalore premise belongs to the assessee company i.e. M/s PSK Finance Solutions Pvt. Ltd., he not even once anywhere in his sworn statement recorded u/s 132(4) of the Act mentioned the name of any other person/person’s with respect to the cash found and

ITA No. 663/Del/2021 10 PSK Finance Solutions Pvt. Ltd. seized during the course of search operation. In his sworn statement he has voluntary admitted that the cash found during search at Bangalore premise belongs to the assessee company.

iv) The story of the assessee company is also incomplete as no confirmation from the party, who is claimed to have purchased the shares in cash from Ms. Jai Shiv Saxena, has been furnished by the assessee company.

From the above discussion it is clear that it is nothing but the afterthought of the assessee created just to explain the source of the cash found and seized in its possession from its premises.

5.5. Therefore, the contention of the assessee that the cash amounting to Rs. Rs.4,37,50,000/- found and seized in its possession at its premise i.e. Flat no. 602, MB Maple Block, Golden Grand Bangalore belongs to Sh. Jai Shiv Saxena could not be explained and therefore, source of cash of Rs.4,37,50,000/- remained unexplained and unverifiable and an addition of Rs.4,37,50,000/-, is made to the income of the assessee company for the year under consideration.”

ITA No. 663/Del/2021 11 PSK Finance Solutions Pvt. Ltd. 5. During the course of proceedings before the ld. CIT(A), the assessee submitted the following:

“Issue involved - Addition of Rs.4.37 Crs. made towards cash seized from flat belonging to appellant company at Bangalore during search action u/s 132A.

Relevant Facts -

ITA No. 663/Del/2021 12 PSK Finance Solutions Pvt. Ltd. conducted a survey action u/s 133A on premises of Jai Saxena on 11.09.2015. In the said action, documentary evidences were impounded which proved that Mr. Saxena had earned huge undisclosed cash on sale of shares of a company, M/s. EAFT Technologies Pvt. Ltd. [manufacturer of Akash Tablets] to a UK based businessman. It was noticed that Mr. Saxena had earned unaccounted cash consideration ofRs.4.58 Crs. in A.Y. 2014-15.

A.O.’s contentions for making the addition of Rs.4.37 Crs. by treating the entire cash seized during search

ITA No. 663/Del/2021 13 PSK Finance Solutions Pvt. Ltd. action as undisclosed income in the hands of appellant company-

Assessee’s contentions before Your Honour-

First reason stated by the A.O. for treating the cash of Rs.4.37Crs. as undisclosed income in the hands of the assessee company is not justified–

ITA No. 663/Del/2021 14 PSK Finance Solutions Pvt. Ltd. property. Hence, it was impossible for the appellant company to have earned such huge undisclosed cash of Rs.4.37 Crs. within three years from inception. Thus, it has been duly established that the initial statement was prima facie incorrect and the factual assertion made therein was apparently incorrect. Accordingly, it is submitted that the reliance placed by the A.O. on the statement u/s 132(4) is not justified in view of the fact that the said statement was immediately retracted and especially when it was duly demonstrated by the assessee that the factual assertion made in the said statement was apparently incorrect.

a. Documentary evidences impounded by Dept. during consequential survey action conducted on Mr. Saxena’s premises at Bangalore. b. Admission of Mr. Jai Saxena in statement recorded during survey action. c. ITR filed by Mr. Saxena for A.Y.2014 -15 subsequent to survey by paying taxes with huge interest thereon. d. Asst. order u/s 147 passed by A.O. in case of Mr. Saxena for A.Y.2014 -15 wherein the above undisclosed cash income offered by him as his income has been assessed in his hands.

ITA No. 663/Del/2021 15 PSK Finance Solutions Pvt. Ltd. 10. Thus, the explanation furnished by the assessee regarding source of the cash found during search action is duly substantiated by various documentary evidences. This cash has been owned by Mr. Jai Saxena upon payment of substantial taxes and huge interest thereon. Further, the assessee has also demonstrated that it would have been impossible for the assessee company to have earned such huge undisclosed cash within a short span of three years from incorporation especially when no immovable property was sold within this period. On the other hand, it is to be noted that the Id. A.O. has not brought on record any corroborative evidence [apart from the retracted statement u/s 132(4)] to establish that the said cash belonged to the appellant company and not to Mr. Saxena. It is submitted that not an iota of corroborative evidence whatsoever was found in the course of search action to even indicate that appellant company could have earned such huge undisclosed cash of Rs.4.37 Crs. within a period of three years from its incorporation. In view of the above facts, the assessee submits that the claim of the appellant company is substantiated by various documentary evidences whereas the contention of the A.O. is not supported by any cogent evidences and therefore, the addition made by the A.O. solely on the basis of the initial statement 132(4) which was immediately retracted by demonstrating the said statement to be apparently incorrect, is not justified in law and on facts of the case.

ITA No. 663/Del/2021 16 PSK Finance Solutions Pvt. Ltd. Second reason stated by the A.O. for treating the cash of Rs.4.37 Crs. as undisclosed income in the hands of the assessee company is not justified–

Leaving apart legal submissions, the following facts may please be appreciated to determine the genuineness of claim made by the appellant company –

Theory of Human Preponderance:

ITA No. 663/Del/2021 17 PSK Finance Solutions Pvt. Ltd. 12. If there was no connection between PSK company and Mr. Saxena, then there was no reason why PSK could have stated that the said cash belonged to Mr. Saxena, who is alleged to be an unaccounted person. Further, the truth lying in the claim of the appellant was also duly substantiated in view of the documentary evidences found during the consequential survey action conducted by Dept, on premises of Mr. Saxena. It is to be noted that if Mr. Saxena was not connected with PSK and that if the said cash did not belong to him, then it would have been virtually impossible that PSK would have known of the undisclosed cash income earned by Mr. Saxena and in that case, no such details of manner of earning undisclosed income by Mr. Saxena could have been revealed by Mr. Atul Mohan during investigation proceedings. Thus, even the theory of human preponderance clearly supports the genuineness of claim of the appellant.

No loss of Revenue: in fact, the Dept. could recover almost twice the quantum of tax liability in hands of Jai Saxena due to the disclosure/ claim made by the assessee company –

ITA No. 663/Del/2021 18 PSK Finance Solutions Pvt. Ltd. seized cash of Rs.4.37 Crs. actually belonged to PSK company, then the same could have been offered to tax by PSK in its hands for A.Y.2016 -17. The total demand raised by the Revenue in the hands of PSK in that case would not have exceeded Rs.1.95 Crs. [which is the actual demand raised in the asst, order u/s 143(3) passed in case of PSK company] and no demand would have been raised in the case of Mr. Saxena in that scenario.

ITA No. 663/Del/2021 19 PSK Finance Solutions Pvt. Ltd. almost double revenue has been recovered by the Dept, due to above disclosure made by PSK company. In view of the above facts, the claim made by the appellant company may please be accepted and justice may be granted.

In view of the above facts, it is humbly prayed that the Id. A.O. may please be directed to assess the impugned seized cash as undisclosed income in the hands of Mr. Jai Saxena for A.Y.2014 - 15 as has already been done in the asst, completed u/s 147 in his case and the said cash may not be assessed as undisclosed income in the hands of the assessee company.

In case, any further clarification is required, the same would be submitted on hearing from Your Honour.

During the course of proceedings before the ld. CIT(A), the assessee submitted its supplementary submissions which are as under:

“1] …. 2] Relevant Facts –

The statement of the director of the appellant company, Shri Atul Mohan was recorded u/s 132(4) on 20.08.2015 at his residential premises located at C - 69, Sector 30, Noida, Uttar Pradesh. In the said statement, Mr. Mohan stated that the said cash was generated out of unaccounted real estate transactions carried out by the assessee company in and around

ITA No. 663/Del/2021 20 PSK Finance Solutions Pvt. Ltd. Bangalore. It was further stated that he was not in a position to produce any documentary evidences to prove the above receipts and hence, he agreed to offer the said cash as undisclosed income in the hands of the assessee company for A.Y. 2016-17. The copy of the said statement dated 20.08.2015 of Shri Atul Mohan recorded at New Delhi is enclosed at Sr. No. 3 of the Paper Book. The relevant extract of the above statement is reproduced hereunder for ready reference –

Q.21 I am showing you the details of cash of Rs.4,37,50,000/- as per annexure C/PSK which was seized by the CID, Economic Offence Division, Bangalore during the search on 05 & 06 August 2015 at Flat No.602 MB, Maple Block, Golden Grand, Bangalore which was subsequently seized by the Income Tax Department, Bangalore on 08.08.2015. Please give the details of owner of the same and also source for the same.

Ans.: The cash of Rs.4,37,50,000/- seized at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore, is generated out of business activates carried out by M/s PSK Finance Solutions Pvt. Ltd. in and around Bangalore city which has not been accounted in the books of accounts of the said company and also I am not in a position to produce any documentary evidence for the receipt of the same.

ITA No. 663/Del/2021 21 PSK Finance Solutions Pvt. Ltd. Q.22 As you are not able to substantive the source of cash of Rs.4,37,50,000/- which was seized by the CID, Economic offence Division, Bangalore during the search on 05 & 06 August 2015 at Flat No.602 MB, Maple block, Golden Grand, Bangalore winch was subsequently seized by the Income Tax Department, Bangalore on 08.08.2015, why the same should not be treated as unaccounted. Please give your comment of the same.

Ans.: Sir, I am not in a position to produce the documentary evidence for generation of above seized cash, but I state here that the balance sheet of M/s. PSK finance Solutions Pvt. ltd. justified the fact that it was actively pursuing real estate both in Delhi NCR and Bangalore.

I therefore, voluntarily agree to offer to tax the cash seized of Rs.4,37,50,000/- by taking into the books of accounts as income in addition to the regular income for the current financial year, i.e., Financial Year 2015-16. I also hereby agree to pay the taxes as applicable as per the provisions of the Income tax Act.

2.2] Thereafter, on 27.08.2015, subsequent statement u/s 131 of Shri Atul Mohan was recorded at the Bangalore at the Office of DDIT (Inv.), Unit - 1(1), Room No.206, C.R. Building Annexe, Bangalore. In the said statement, Shri Atul Mohan stated that the cash amounting to Rs.4,37,50,000/- found at the premises of the appellant

ITA No. 663/Del/2021 22 PSK Finance Solutions Pvt. Ltd. company at Bangalore was kept by and belonged to one, Shri Jai Shiv Saxena who was looking after the operations of the appellant company in Bangalore and who was having the custody of the impugned flat at 602MB, Golden Grand, Bangalore. The copy of the said statement is enclosed at Sr. No. 4 of the Paper Book. The relevant extract of the statement of Shri Atul Mohan dated 27.08.2015 is reproduced hereunder for ready reference-

Q.6. As you have stated that the flat at 602 MB, Maple Block, Golden Grand Apartment, Yeswanthpur, Bangalore is the property of company M/s PSK Finance Solutions Pvt. Ltd., Please state that why the personal documents pertain to Shri Kapil Mohan S/o Shri Nareeh Mohan Saxena and Dr. Richa Saxena w/o Shri Kapil Mohan have been found and seized by Economic Offence Division (EOD), CID, Bengaluru which are subsequently seized by Income tax Department.

Ans.: Sir, as the renovation of the house of Shri Kapil Mohan who is my brother, was going on during the last month hence he had given the folders of his and his wife's personal documents for safe keeping to one Mr. J. Saxena who might have placed at above mentioned flat.

Q.7. Please state who is Mr. J Saxena and how he is related to you or your brother’s family. You are also required to state how he is having the access to the office of M/e PSK Finance Solutions Pvt. Ltd. at 602

ITA No. 663/Del/2021 23 PSK Finance Solutions Pvt. Ltd. MB, Maple Block, Golden Grand Apartment, Yeswanthpur, Bangalore.

Ans.: Mr. J Saxena is our family friend and he also looks after company operation,-, m Bangalore, As being a family friend, a set of keys of office of M/s PSK Finance Solutions Pvt. Ltd. situated -at 602 MB, Maple Block, Golden Grand Apartment, Yeswanthpur, Bangalore have been handed over to him, so that he can take care the operations of company from the flat.

Q.8. Please give the complete address and contact details of Mr. J Saxena. Please also provide the detailed information that how did you come in contact with him with what purposes.

Ans.: His full name is Shri Jai Shiv Saxena, he is our family friend whom we know him last 15 years. He was in the business of software development and real estate consultation and off late he is only into real estate. His present office address is at 135B, Brigade Garden, Church Street, Bangalore-01 and his contact number is 09020900011. He is involved in affairs of PSK Finance Solutions Pvt. Ltd. since its inception.

Q.9. As you have stated in reply to Q.6. that Mr. Jai Shiv Saxena is involved in the affairs of M/s PSK Finance Solutions Pvt. Ltd., please state his role and responsibilities in M/s PSK Finance Solutions Pvt. Ltd.

ITA No. 663/Del/2021 24 PSK Finance Solutions Pvt. Ltd. Ans.: As he is a close family friend who also has rich knowledge of real estate market in Bangalore, we had taken his advice for investing and also for marketing for properties purchased. Further, in the year 2013, he had expressed his interest in joining the company as one of the investors by subscribing equity. He was in the process of disinvesting his holding in software business, he had assured to invest the proceeds in PSK Finance Solutions Pvt. Ltd. He was also interested in investing some of the good properties which the company had located near Delhi and Bangalore. Hence from 2013 he started investing with the company. Thereafter, in April 2015 Mr. Jai Saxena expressed his desire to withdraw his investment made along with company for his new venture. Therefore after April 2015, he might have kept the cash in the above said premises.

Q 10. As you have stated in your reply to Q.No.9 that Mr. J Saxena has given a cash of Rs.5 Crores with the intention to invest in the property, Please state do you have any agreement or Moll in this regard.

Ans.: There must be a MoU. Kindly provide me some time to ascertain the same and produce before you.

Claim of the appellant company made vide letter dated 04.09.2015 filed before DDIT (Inv.), Bangalore clarifying that the impugned cash belonged to Mr. Jai Shiv Saxena and not to the appellant company –

ITA No. 663/Del/2021 25 PSK Finance Solutions Pvt. Ltd. As stated earlier, the registered office of the appellant company is based in New Delhi whereas the Directors and major shareholders of the appellant company also used to reside in Noida/ New Delhi. It is submitted that the operations of the appellant company were looked after mainly by Mr. Jai Shiv Saxena, who was a family friend of the Directors of the appellant company. Mr. Saxena was engaged in the business of real estate and he was based in Bangalore and hence, in view of the fact that all the directors of the appellant company were residing in Noida, the operations of the appellant company at Bangalore were looked after by Mr. Saxena. It is to be noted that the initial statement u/s 132(4) recorded at Noida, Mr. Atul Mohan had stated that the impugned cash seized from the Bangalore premises of the appellant company was generated out of real estate transactions carried out by the appellant company in and around Bangalore. Further, on being asked regarding the sources of cash seized from the Bangalore premises, Mr. Atul Mohan stated that he was not in a position to furnish any documentary evidences to prove the generation of the above cash.

2.3.1] Thereafter, after visiting Bangalore, Mr. Atul Mohan properly verified the records of the appellant company and sought the details and evidences regarding sources of the cash seized from the Bangalore premises from Shri Jai Shiv Saxena. At that time, Mr. Atul Mohan found out that the entire cash of Rs.4,37,50,000/- found at the premises of the appellant company i.e. the flat at Bangalore belonged to Mr. Jai Shiv Saxena and it was kept by him at the said flat since the said flat was in the custody of Jai Shiv Saxena who used to look

ITA No. 663/Del/2021 26 PSK Finance Solutions Pvt. Ltd. after the operations of the appellant company at Bangalore. On getting aware of the above facts, Shri Atul Mohan filed a letter dated 04.09.2015 with the DDIT (Inv.), Unit - 1, Bangalore wherein it was clarified that the impugned cash found at the Bangalore premises of the appellant company belonged to Shri Jai Shiv Saxena and the sources of earning the said cash by Mr. Saxena were also clarified in the said letter. It was stated that the above cash was earned by Mr. Saxena on sale of shares of a company and the said amount was not offered to tax by Mr. Saxena. Accordingly, it was clarified that the impugned cash did not represent undisclosed income of the appellant company but the same represented undisclosed income belonging to Mr. Jai Shiv Saxena.

The copy of the said letter is enclosed at Sr. No. 5 of the Paper Book whereas the entire extract of the said letter is reproduced hereunder for ready reference –

04.09.2015 To The Dy. Director of Income Tax – Investigation Unit-1, Bangalore

Sir,

Sub: Statement u/s 132 of the Income Tax Act, 1961- Clarification.

With reference to the above, I would like bring to your kind notice that in my statements recorded u/s

ITA No. 663/Del/2021 27 PSK Finance Solutions Pvt. Ltd. 132 of the Income Tax Act, 1961 on 6th August, 2015, 20th August, 2015 and 27th August, 2015, I have stated that cash found in the premises of PSK Finance Solutions Pvt. ltd. at flat No. 602 MB, Golden Grand, 5th Yeshwanthpur, Bangalore on August, 2015 pertains to the company PSK Finance Solutions Pvt. Ltd. as I was not able to produce any documentary evidence in support of the cash found. As such I had offered to tax the said sum in the hands of PSK Finance Solutions Pvt. Ltd. for the Financial Year 2015-16.

However, after ascertaining the activities and the operations carried on from the said premises by Mr. Jai Shiv Saxena, I realized that the cash found does not belong to the company.-1 was under the impression that this was profits made on behalf of the company by myself and Jai Shiv Saxena at Bangalore. Now, I am given to understand that the entire cash belongs to Mr. Jai Shiv Saxena. I also understand that this also represents profit earned by him on sale of shares held by him in his one of the companies.

In the circumstances, I would request your goodself to kindly allow me to correct my earlier statements given on 20th August, 2015 under Question No. 21 and 22 as below:

Q. 21 I am showing you the details of cash of Rs. 4,37,50,000/-as per annexure C/PSK which was seized by the CID, Economic Offence Division, Bangalore during the search on 05 & 06 August 2015

ITA No. 663/Del/2021 28 PSK Finance Solutions Pvt. Ltd. at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore which was subsequently seized by the Income Tax Department, Bangalore on 08.08.2015. Please give the details of owner of the same and also source for the same.

Ans.: The cash of Rs. 4,37,50,000/- seized at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore, is generated out of business activates carried out by M/s PSK Finance Solutions Pvt. Ltd., in and around Bangalore City which has not been accounted in the books of accounts of the said company and also I am not in a position to produce any documentary evidence for the receipt of the same."

Corrected Statement of Answer to Question No. 21.

The cash of Rs. 4,37,50,000/- seized at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore is generated by Mr. Jai Shiv Saxena out of sale proceeds of share held by him in one of his companies and that the said income should be taxed in the hand of Mr. Jai Shiv Saxena.

"Q. 22 As you are not able to substantive the source of Cash of Rs. 4,37,50,000/- which was seized by the CID, Economic Offence Division, Bangalore during the search on 05 & 06 August 2015 at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore which was subsequently seized by the Income Tax Deportment, Bangalore on 08.08.2015, why the same should not

ITA No. 663/Del/2021 29 PSK Finance Solutions Pvt. Ltd. be treated as unaccounted. Please give your comment of the same.

Ans.: Sir, I am not in a position to produce the documentary evidence for generation of above seized cash, but I state here that the balance sheet of M/s PSK Finance Solutions Pvt. Ltd. justified the fact that it was actively pursuing real estate both in Delhi NCR and Bangalore.

Corrected Statement of Answer to Question No. 22.

Cash seized belongs to Mr. Jai Shiv Saxena and not to PSK Finance Solutions Pvt. Ltd and also that PSK Finance Solutions Pvt. Ltd. has not realized any such gains and that I am also not having any documentary evidence to substantiate the earnings/profits made by the company. Mr. Jai Shiv Saxena will provide the necessary documentary evidence in support thereof.

Further, I would also wish to clarify that though we had discussed the terms and conditions of MOU, the same was not ultimately signed, hence there is no signed MoU between us.

Admission of Shri Jai Shiv Saxena in the course of survey action u/s 133A conducted on him claiming that the cash seized from the premises of the appellant company belonged to him (on the basis of impounded documents found relating to sale of shares and receipt of unaccounted sale consideration)–

ITA No. 663/Del/2021 30 PSK Finance Solutions Pvt. Ltd. 2.4] It is submitted that thereafter, a consequential survey operation u/s 133A of the Income Tax Act was conducted on the business premises of Shri Jai Shiv Saxena at Office No. 135, B Brigade Garden, Church Street, Bangalore. In the course of the survey action, the Dept. noticed that Mr. Saxena was looking after the operations of the appellant company at Bangalore since the year 2013.It was further noticed that prior to 2013, Shri Saxena was a promoter and shareholder in a company named, M/s. EAFT technologies Pvt. Ltd. which was engaged in software development business. In the course of survey action conducted on Shri Jai Shiv Saxena, an agreement dated 11.02.2012 entered between EAFT Technologies Pvt. Ltd., the Promoters (including Mr. Saxena) and an Investor company, M/s. Mesostrefia Ltd. owned by one, Mr. Arjun K. Vekaria, a UK based businessman, was found and impounded. An MOU entered between the above parties was also attached to the said agreement and the said MOU was also impounded. The said agreement and MOU contained details of sale of shares of EAFT Technologies Pvt. Ltd. executed by the promoters (including Mr. Saxena) to the company owned by Mr. Arjun Vekaria.

2.5] In the course of the survey proceedings u/s 133A, the statement of Shri Jai Shiv Saxena was recorded u/s 131 on 11.09.2015 wherein he was questioned regarding the sale of shares made as per the above impounded agreement and whether the same was offered to tax by him. In his statement recorded on oath, Mr. Jai Saxena admitted that he had received total consideration of Rs. 6,25,97,924/- on sale of shares to Mr. Arjun Vekaria and his company during A.Y. 2013-14 and 2014- 15. Out of Jhe said consideration, Rs.4,58,29,664/- was

ITA No. 663/Del/2021 31 PSK Finance Solutions Pvt. Ltd. received in cash whereas the balance amount of Rs.1,67,68,260/- was received through banking channel In his statement recorded on oath, Mr. Saxena further stated that he was looking after the operations of the appellant company at Bangalore and that the premises owned by the appellant company at Flat No. 602 MB, Golden Grand, Bangalore was in his custody/ possession. In the said statement, Mr. Saxena admitted that the cash of Rs.4,37,50,000/- seized from the above premises was belonging to him and that the same was earned out of sale of shares of EAFT Technologies Pvt. Ltd. which was not offered to tax by him. The copy of the statement of Shri Jai Shiv Saxena dated 11.09.2015 and his statement recorded on 14.09.2015 in continuation of the said statement is enclosed at Sr. No. 7 of the Paper Book.

Claim reiterated by Shri Jai Shiv Saxena that the cash seized from the premises of the appellant company belonged to him before the Karnataka Lokayukta-

2.6] In the meanwhile, while the investigation by the Income Tax Dept, was under progress, the Office Of Superintendent of Police, Karnataka Lokayukta summoned Mr. Jai Shiv Saxena on 19/10/2015 for interrogation regarding the seizure of above cash and he was subsequently taken into custody. It is submitted that even in the interrogation proceedings before the Lokayukta, Mr. Saxena has claimed that the cash amounting to Rs.4,37,50,000/- which was seized from the premises of the appellant company at Bangalore belonged to him and claimed that the said seized cash may be returned to him. It is submitted that in support of his claim, Mr. Saxena also

ITA No. 663/Del/2021 32 PSK Finance Solutions Pvt. Ltd. produced substantiating documentary evidences in the form of ROC records giving share transfer details, Agreement and MOU dated 11.02.2012 impounded from his premises, bank statement showing part consideration on sale of shares received through banking channel from Arjun Vekaria owned company etc. before the Lokayukta. The relevant documents in respect of the Lokayukta proceedings are enclosed at Sr. No.9 of the Paper Book. Revised return filed by Shri Jai Shiv Saxena for the relevant years offering to tax the entire sale consideration of shares (including the unaccounted cash consideration of Rs.4,58,29,664/-, which formed source of the cash seized from the premises of the appellant company) –

2.7] It is submitted that thereafter, on 29.07.2016, Shri Jai Shiv Saxena voluntary filed revised returns for A.Y.2013-14 and 2014-15 before his Jurisdictional A.O. i.e. ITO, Ward 1, Shahdol wherein the additional income on account of long term capital gains on sale of the above shares (including the undisclosed cash consideration of Rs.4,58,29,664/-) was offered to tax. The copies of the said revised returns filed by Shri Jai Shiv Saxena are enclosed at Sr. No. 11 of the Paper Book.

The additional income on account of sale of shares (including unaccounted cash consideration of Rs.4,58,29,664/ -) assessed to tax in the hands of Jai Shiv Saxena by the A.O. (on the basis of the admission made by Jai Saxena in his statement u/s 131) in the asst, orders passed u/s 143(3) r.w.s. 147 for A.Y.2013-14 and 2014-15.

ITA No. 663/Del/2021 33 PSK Finance Solutions Pvt. Ltd.

2.8] It is submitted that thereafter, the case of Shri Jai Shiv Saxena for A.Y.2013-14 and 2014-15 was reopened by the A.O. by issuing notice u/s 148 dated 31.03.2018. The asst. u/s 143(3) r.w.s. 147 in his case for the two years has been completed on 24.12.2018. In the asst, orders passed in the case of Shri Jai Shiv Saxena, the A.O. has assessed the long term capital gains declared by Shri Jai Shiv Saxena (including the undisclosed cash consideration of Rs.4,58,29,664/-) as income of the Shri Saxena on the basis of the declaration given by Shri Saxena in his statement dated 11.09.2015. The copies of the impugned asst, orders passed in the case of Shri Jai Shiv Saxena for A.Y.2013 - 14 and 2014 -15 are enclosed at Sr. Nos. 14 & 15 of the Paper Book. At this juncture, it is important to mention that the above asst, orders in the case of Jai Shiv Saxena were passed on 24.12.2018 whereas the asst, ordep incase of the appellant company was passed on 29.12.2017. Therefore, the fact that the impugned undisclosed income on sale of shares (which formed the source of the cash seized at the premises of the appellant company) has been assessed to tax in the hands of Shri Jai Shiv Saxena by the A.O. in his asst., was not made available to the A.O. of the appellant company who passed the present asst, order u/s 143(3) on 29.12.2017.

Claim of the appellant company before the A.O. in the course of the asst. proceedings –

3] In the course of the asst, proceedings u/s 143(3) in the case of the appellant company, the A.O. noticed that the amount of cash seized of Rs.4,37,50,000/- from the premises of the appellant company during the search action on 05.08.2015

ITA No. 663/Del/2021 34 PSK Finance Solutions Pvt. Ltd. was not offered to tax as income in the return of income filed u/s 139 for A.Y.2016-17 by the appellant company on 20.03.2017. Accordingly, the A.O. asked the appellant company to show cause as to why the impugned amount of seized cash of Rs.4,37,50,000/- should not be taxed as unexplained cash in the hands of the appellant company.

3.1] In response thereof, the appellant filed a reply dated 07.12.2017 wherein the appellant claimed that the impugned cash found at the premises of the appellant company represented the unaccounted income earned by and belonging to Mr. Jai Shiv Saxena and the same did not represent the unaccounted income earned by the appellant company. In this regard, it was explained that the initial declaration made by Mr. Atul Mohan in the statement dated 20.08.2015 was given under misinterpretation of facts and without consulting the relevant person i.e. Mr. Jai Shiv Saxena who was looking after the operations of the appellant company in Bangalore from where the cash was seized. It was stated that the said statement was immediately retracted vide letter dated 04.09.2015 filed with the DDIT (Inv.), Bangalore wherein it was clarified that the impugned cash represented unaccounted income of Mr. Jai Shiv Saxena earned by him from sale of shares and the same did not represent unaccounted income of the appellant company.

3.2] It was explained that Mr. Saxena had also owned up the said cash and he had time and again asserted before the Income Tax Authorities as well as before the Karnataka Lokayukta that the impugned cash seized from the premises of the appellant company belonged to him. He had admitted that

ITA No. 663/Del/2021 35 PSK Finance Solutions Pvt. Ltd. the said cash represented his unaccounted income which was earned by him on sale of stake/ shareholding of a company wherein he was a promoter to a UK based businessman. It was explained by the appellant that the above claim made by Mr. Saxena before the Income Tax Dept, and Karnataka Lokayukta was further substantiated/ proved by the documentary evidences in the form of Agreement and MOU dated 11.02.2012 for transfer of shareholding by Mr. Saxena to UK based businessman, which was found and impounded in the course of survey action u/s 133A conducted on the premises of Mr. Saxena. Similarly, the fact of Mr. Saxena having earned huge unaccounted income on sale of shares was also proved by other documentary evidences like share transfer records obtained from MCA portal, bank statement of Mr. Saxena etc. Thus, the appellant submitted that considering the categorical admission made by Mr. Saxena which was a]so supported by substantiating evidences impounded during survey proceedings and other evidences, there was no reason to treat the said cash as undisclosed income belonging to the appellant company and not to Mr. Saxena.

3.3] The appellant further explained that as against the substantiating evidences found at the premises of Mr. Saxena to prove that the impugned undisclosed cash represented unaccounted income earned by him, no evidences, whatsoever, were found in the course of the search action at the premises of the appellant company to indicate that the appellant company had earned such huge quantum of unaccounted cash income. It was orally explained that the appellant company was incorporated in April 2012 and prior to the date of seizure of

ITA No. 663/Del/2021 36 PSK Finance Solutions Pvt. Ltd. cash i.e. 05.08.2015, the appellant company had not sold any immovable property since inception and therefore, it was practically impossible that the appellant company could have earned such huge undisclosed income of Rs.4.37 crores from any other source since its incorporation. In view of the above facts, the appellant stated that the seized cash belonged to Mr. Jai Saxena and the same should be treated as undisclosed income in the hands of the appellant company.

3.4] Lastly, it was explained that the said amount was already offered to tax as additional income in the hands of Mr. Jai Shiv Saxena in the revised return filed by him post investigation proceedings and hence, taxing the same amount again as income in the hands of the appellant company would amount to double taxation which would be against the principles of justice. Accordingly, it was prayed that the impugned amount of seized cash of Rs.4,37,50,000/- should not be taxed as income in the hands of the appellant company. The copy of the reply dated 07.12.2017 filed by the appellant company before the A.O. is enclosed at Sr. No. 2 of the Paper Book.

Appellant’s submissions before Your Honour –

5] The appellant submits that the above addition made by the A.O. is not justified on facts and in law. At the outset, the appellant submits that the cash seized from the premises of the appellant company represented unaccounted income belonging to Mr. Jai Saxena and the same could not have been treated as undisclosed income in the hands of the appellant company for the detailed submissions and reasons stated in the course of the asst, proceedings. It is submitted that the various reasons

ITA No. 663/Del/2021 37 PSK Finance Solutions Pvt. Ltd. stated by the A.O. for rejecting the claim of the appellant are not justified. The rebuttal of the appellant in respect of the reasons stated by the A. O. for rejecting the claim of the appellant is as under-

Addition made by the A.O. mainly by relying upon the initial statement of Shri Atul Mohan recorded on 20.08.2015 is not justified.

5.1] The A.O. has mainly relied upon the initial statement of Shri Atul Mohan recorded at New Delhi on 20.08.2015 wherein he had stated that the said cash seized from Bangalore premises of the appellant company belonged to the appellant company and the same represented undisclosed income earned from real estate transactions. The appellant submits that the reliance placed upon the A.O. on the said statement, by ignoring the subsequent retraction, explanation & evidences furnished by the appellant and admission made by Shri Jai Saxena, is misplaced. At the outset, the appellant submits that the assertion made by Mr. Atul Mohan in the initial statement dated 20.08.2015 was retracted by him by filing the letter dated 04.09.2015 with the DDIT (Inv.), Bangalore. In the said letter, it was clarified that the assertion made by Mr. Atul Mohan in the initial statement dated 20.08.2015 was made under misinterpretation of facts and after proper verification of facts and records, it was noticed that the impugned cash represented unaccounted income belonging to Mr. Jai Saxena who was managing the operations of the appellant company at Bangalore and who was also having the custody of the premises of the appellant company wherefrom the cash was seized.

ITA No. 663/Del/2021 38 PSK Finance Solutions Pvt. Ltd. 5.2] It is to be noted that the said fact was also accepted by Mr. Jai Saxena who claimed that the said cash belonged to him. It is submitted that Mr. Saxena had also disclosed the sources through which he had earned the impugned unaccounted cash. The substantiating evidences in support of his claim were also found in the course of consequential survey proceedings u/s 133A conducted by the Dept, on the premises of Jai Saxena on 10.09.2015. Further, the ownership of the said seized cash was also claimed by Mr. Jai Saxena in the interrogation proceedings before the Karnataka Lokayukta. It is to be noted that in the statement of Mr. Saxena recorded in the course of survey proceedings conducted in his case, he had stated that he was looking after the operations of the appellant company in Bangalore and he was having the custody of the premises at Flat No. 602 MB, Golden Grand Appt., Bangalore. In the said statement, he had categorically admitted that the cash of Rs.4,37,50,000/- seized from the said premises belonged to him and the same was sourced out of unaccounted income earned by way of sale of stake/ shareholding in a company wherein he was a promoter. The said unaccounted income by way of cash seized from the premises of the appellant company was also offered to tax by Mr. Saxena by filing revised returns in his case with the Jurisdictional A.O. at Shahdol on 29.07.2016. Subsequently, on the basis of the impugned admission made by Mr. Saxena in his statement dated 11.09.2015, the A.O. has assessed huge unaccounted income on sale of shares to the tune of Rs.5,38,31,222/- and Rs. 84,16,702/- in the asst, orders passed u/s 147 in

ITA No. 663/Del/2021 39 PSK Finance Solutions Pvt. Ltd. the case of Mr. Jai Shiv Saxena for A.Y.2014-15 and A.Y.2013-14 respectively. In view of the above facts, it is to be appreciated that the subsequent claim made by the appellant by filing the retraction letter dated 04.09.2015 is duly supported by documentary evidences, admission on oath of Shri Jai Shiv Saxena, revised returns filed by Jai Saxena offering the amount of seized cash as his undisclosed income and the said claim has also been accepted by the Dept, itself while passing the subsequent asst, orders u/s 147 in the case of Shri Jai Shiv Saxena.

5.3] As against this, it is to be noted that no evidence whatsoever, was found by the Dept, in support of the initial assertion made by Mr. Atul Mohan in his statement dated 20.08.2015 to the effect that the impugned seized cash represented unaccounted income earned by the appellant company from real estate transactions. In fact, it is to be noted that the appellant company was incorporated-on 27.04.2012. It is submitted that till the date of search/seizure of cash i.e. 5th August 2015, the appellant company had not sold any immovable property. Further, in the total income assessed by the A. O. for earlier years is as follows - A.Y.2013-14 : Loss (Rs.36,240/-), A.Y. 2014-15 : Rs. 11,14,300/- [A.O. had made addition of Rs.26,32,185/- in respect of deemed dividend over and above Rs.11,14,300/-, which has been deleted by Hon’ble CIT(A)], A.Y.2015-16 : Rs. 10,87,420/-. Thus, in view of the quantum of income returned by the appellant company for the earlier years and especially in view of the fact that the appellant has not entered into any real estate transaction of sale of immovable property till the date of seizure of cash from

ITA No. 663/Del/2021 40 PSK Finance Solutions Pvt. Ltd. its inception, it is practically impossible for the appellant company to have earned such huge unaccounted cash income of Rs.4,37,50,000/- from any other sources since its incorporation. Thus, it is submitted that in view of the above facts, it is duly demonstrated that the initial assertion made by Mr. Atul Mohan in his statement dated 20.08.2015 is factually incorrect and improbable on the facts of the case.

5.4] It may also be noted that if the appellant company had earned such huge unaccounted income through any unaccounted transactions, then at least some evidence in the form of rough jottings, notings etc. would have been found during the extensive search proceedings conducted by the Income Tax Dept, at all the premises of the appellant company and its directors. However, it is submitted that no iota of evidence, was found in the course of the search proceedings to indicate that the appellant company had earned any unaccounted income, whatsoever, much less the huge alleged unaccounted cash income of Rs.4,37,50,000/-.

5.5] In nutshell, it is submitted that the appellant had duly discharged the onus cast upon it to prove that the initial assertion made by its director in the statement recorded on 20.08.2015 was factually incorrect and that the said assertion was practically impossible on the facts of the case. Further, the subsequent claim made by the appellant by way of filing the retraction letter dated 04.09.2015 is substantiated by evidences in the form of admission of Mr. Jai Saxena before the I.T. Dept. as well as before the Karnataka Lokayukta, impounded documents found at his premises and other evidences, revised

ITA No. 663/Del/2021 41 PSK Finance Solutions Pvt. Ltd. returns filed by Mr. Saxena offering the impugned unaccounted income to tax. The A.O. has not brought any contrary evidence to disprove the above claim made by the appellant. In fact, the A.O. holding the same Jurisdiction i.e. DCIT, Central Circle 28, New Delhi has accepted the said claim in the asst, orders passed u/s 147 in the case of Mr. Jai Saxena. The A. O. has also not brought any evidence on record to prove that the initial assertion made by the appellant in the statement dated 20.08.2015 is correct.

5.6] In view of the above facts, the appellant submits that it has duly discharged the onus cast upon it to prove that the initial assertion made in the statement dated 20.08.2015 was factually incorrect and the appellant has also discharged the onus to substantiate the subsequent claim with documentary evidences. As against this, the A.O. has neither brought evidence on record to prove that the initial assertion made by the appellant in the statement dated 20.08.2015 is correct nor has the A.O. brought any contrary evidence on record to prove that the subsequent claim made by the appellant in the retraction letter dated 04.09.2015 is incorrect. Therefore, in the absence of any contrary evidence to disprove the claim of the appellant, it is submitted that the A.O. is not justified in making the addition of Rs.4,37,50,000/- on account of seized cash solely by relying upon the declaration made by Mr. Atul Mohan in the statement dated 20.08.2015.

5.7] In this respect, the appellant would like to reply upon the ratio laid down by Hon’ble Delhi High Court in the case of CIT v. Sunil Aggarwal [379 ITR 367]. In the said case, it has been held

ITA No. 663/Del/2021 42 PSK Finance Solutions Pvt. Ltd. that where the assessee had retracted from the earlier declaration given by him in the statement u/s 132(4) by furnishing a reasonable explanation and substantiating evidence in support of the retraction/ subsequent claim, then in such circumstances, no addition can be made by the A.O. on the basis of the statement u/s 132(4) of the Act. The relevant facts in the said case are extracted from the judgment as under:

“5. In the assessment order, it was recorded by the Assessing Officer (AO) that during the course of search cash amounting to Rs.86 lakhs was seized from the premises of Canara Bank, Arya Samaj Road, Karol Bagh from an employee of the Assessee, one Mr. Gopal Singh. It was further recorded by the AO that a statement of the Assessee was recorded during the course of search under Section 132(4) of the Act. In response to question No. 11, the Assessee is stated to have made a categorical admission that the said sum of Rs.86 lakhs belonged to him; that it was being deposited by Mr. Gopal Singh in the Canara Bank account which was not the account of the Assessee; that routinely surplus cash was given to Mr. Gopal Singh to be deposited for which he was paid 5% of the cash money; that the seized cash amount of Rs.86 lakhs represented “my undisclosed income not recorded in the Books of Accounts”.

ITA No. 663/Del/2021 43 PSK Finance Solutions Pvt. Ltd. the surrender was made under a mistaken belief and “without looking into books of account and without understanding law”. He further stated that he had been “compelled perturbed by events of search and wherein I had no opportunity either to consult my advocates, my staff or my books of accounts etc. The pressure of search was built so much that I had to make this surrender without having actual possession of the assets or unexplained investments or expenses incurred and hence there being no such income as undisclosed”. He claimed that the money seized already stood declared as out of known sources and the said surrender was meaningless. He did not admit that the surrender was voluntary. The Assessee also offered an explanation regarding the said cash amount that these were from the undisclosed sales of disclosed purchases which were verified from the records and the books of accounts.

On these facts, Hon’ble High Court held as under:

“13. The narration of facts hereinabove shows that the Assessee did not simply retract the statement made by him during the course of surrender. He also offered an explanation for the sum of Rs. 86 lakhs found in the hands of his employee, Mr. Gopal Singh. One feature that distinguishes the present case from that before the Punjab and Haryana High Court in Lekh Raj Dhunna(supra) is that

ITA No. 663/Del/2021 44 PSK Finance Solutions Pvt. Ltd. in the latter case, the Assessee failed to discharge the onus on him through cogent material to rebut the presumption that stood attracted in view of the statement made under Section 132(4) of the Act. In the present case, as noted by the ITAT, the Assessee sought to explain the said amount with reference to the entries in the books of accounts of the sales made during the year and the stock position. In other words, the AO did not find that the cash seized represented amounts not emanating from sales but some other source. The fact that the Assessee may have retracted his statement belatedly did not relieve the AO from examining the explanation offered by the Assessee with reference to the books of accounts produced before him.

ITA No. 663/Del/2021 45 PSK Finance Solutions Pvt. Ltd. his employee and this was verifiable from the books of accounts. In the circumstances, it was unsafe for the AO to proceed to make additions solely on the basis of the statement made under Section 132(4) of the Act, which was subsequently retracted.”

5.8 The appellant submits that in the instant case, the retraction is made by the appellant within 15 days from recording the initial statement dated 20.08.2015. Further, the Director has explained that the initial statement was recorded at New Delhi and before recording the said statement, the Director had not verified the records and he had also not consulted/ obtained proper information from Mr. Jai Saxena, who was handling the operations of the appellant company at Bangalore from the flat wherefrom the impugned cash was seized. Thus, it was explained that the initial statement was given under confusion and misinterpretation of facts. The Director explained that on visiting Bangalore, after proper verification of records and obtaining information from Mr. Jai Saxena, it was realized that the said cash found at Bangalore belonged to Mr. Jai Saxena and it was not related to the operation of the appellant company. Hence, the retraction was made within 15 days of recording the initial statement. Further, the appellant also explained that the appellant company had been incorporated only three years ago and only nominal income was assessed for the earlier three years and therefore, in view of the fact that the appellant company had not sold any immovable property till the date of seizure of cash since its inception, then it was impossible that the appellant company could have earned such huge unaccounted cash income of Rs.4.37 crores since its incorporation. Thus, the appellant

ITA No. 663/Del/2021 46 PSK Finance Solutions Pvt. Ltd. substantiated the fact that initial declaration made by it was prima-facie incorrect and practically improbable. It is to be noted that the subsequent claim made by the appellant on retraction of the earlier statement was also substantiated by the admission made by Mr. Jai Saxena before the Income Tax Dept, and Karnataka Lokayukta and evidencing impounded during survey action at the premises of Mr. Jai Saxena. The appellant further submits that the A.O. has not brought any corroborative evidence on record to disprove the claim of the appellant. In view of the facts, the appellant submits that the facts in the instant case are similar to the facts in the case of CIT v. Sunil Aggarwal (cited supra) and hence, the decision of Hon’ble Jurisdictional High Court in the above case is squarely applicable to the case of the appellant. Accordingly, it is submitted that the addition made by the A.O. solely on the basis of the statement u/s 132(4) is not justified and the same may be deleted.

5.9 In this regard, the appellant would further like to reply upon the ratio laid down by Hon’ble Gujarat High Court in the case of Chetnaben J Shah Legal Heir of Jagdish Chandra K. Shah Vs. ITO[(2016) 140 DTR 0235]. In the said case, Hon’ble High Court has held that even in cases where it is not proved by the assessee that the statement u/s 132(4) was recorded under threat or coercion, still no addition can be made by the A. O. solely on the basis of declaration made by the assessee in the statement u/s 132(4) if such statement is subsequently retracted by the assessee and the A.O. does not bring any corroborative evidence on record to prove that the amount admitted by the assessee in the statement u/s 132(4) actually

ITA No. 663/Del/2021 47 PSK Finance Solutions Pvt. Ltd. represents undisclosed income earned by the assessee. In that case, Hon’ble High Court has approved and affirmed the decision rendered by the CIT(A) by holding that the CTT(A) has rightly appreciated the position of law. The relevant finding of the CIT(A) rendered in that case as reproduced in the order passed by Hon’ble Gujarat High Court is as under:

“24. It is a normal presumption that —statement under section 132(4) is given voluntarily unless it is proved otherwise. There is no evidence on record to show that this statement was given in any coercion. Therefore, I am unable to agree with the assessee that it was a forced statement. But I am reasonably impressed by the contention that this statement was subject to variation on either side after verification i.e. assessee could reduce the disclosure made or the Assessing Officer could enhance the same if the facts and evidence so warranted. May be, even if this fact is not rrlentioned in the statement itself, the point will still remain since it is no body's case to get say any extra tax then is due. The reality remains that there is no evidence what-so-ever with the department even in consequence of a serious action like search and seizure followed by detailed security which could support the earning of speculation income of Rs. 10,50,000/- in this year. In other words, there is no evidence to support the very existence of this income except the so called statement u/s 132(4) of the Act. It defies logic that an assessee will or should admit any income which he had not earned and which the department had not found out. I do not find anything against the arguments that disclosure u/s. 132(4) was subject to variation and once the assessee had access to seized documents and he realized

ITA No. 663/Del/2021 48 PSK Finance Solutions Pvt. Ltd. subsequently that there was no occasion to make this disclosure, he was having an inherent right to clarify the situation so that he could be taxed only on real income and not on an income which was not there at all, since there was no evidence to prove otherwise too. In addition, the very important fact that remains that inspite of the search, no material/evidence was found to show that the assessee was having any other undisclosed assets which could be linked with this disclosure. In view of the totality of the circumstances, arguments given by the assessee and reasoning as above, the addition made is deleted."

In that case, Hon’ble High Court held that the above decision rendered by the CIT(A) was based on sound principles of law. Hon’ble Court held that the subsequent action of the Tribunal in reversing the order of the CIT(A) and confirming the addition made by the A.O. was not justified in law and therefore, the decision of the CIT(A) was upheld by Hon’ble Gujarat High Court.

ITA No. 663/Del/2021 49 PSK Finance Solutions Pvt. Ltd. of such unaccounted income by Mr. Jai Saxena which were found in the course of survey proceedings conducted on his premises and other records. The appellant company has also demonstrated that it is impossible for the appellant company to have earned such huge unaccounted cash income within a span of three years from its incorporation, especially when no property was sold by the appellant company till the date of search. Thus, it is to be appreciated that the presumption drawn u/s 132(4A) that the impugned cash found from the possession of the appellant company may belong to the appellant, has been duly rebutted by the appellant company by furnishing substantiating evidences. Further, the A.O. has not brought on record any corroborative evidence whatsoever, to prove that the said cash belongs to the appellant company. In view of the above facts, the appellant submits that the presumption u/s 132(4A) has been successfully rebutted by the appellant in the instant case and hence, no addition on account of seized cash can be made in the hands of the appellant on the basis of the provisions of section 132(4A) of the Act.

6.1 In this regard, the appellant would like to rely upon the following decisions wherein it has been held that the presumption u/s 132(4A) is a rebuttable one and no addition can be made solely on the basis of the said presumption once the same is rebutted by the assessee by offering reasonable explanation:

a. P. K. Metrani vs. CIT [(Supreme Court) Civil Appeal No. 5673-5675/2012] dated 15.11.2006 held that,

ITA No. 663/Del/2021 50 PSK Finance Solutions Pvt. Ltd. “Search and seizure under Section 132 is a serious invasion into the privacy of a citizen, therefore, it has to be construed strictly. Sub-section (4A) was inserted by Taxation Law (Amendment) Act, 1975 with effect from 1.10.1075 to permit a presumption to be raised in the circumstances mentioned therein. Before the insertion of sub-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 belonged to that person was on the Income Tax Department. Sub-section (4A) enables an assessing authority to raise a rebuttable presumption that such books of account, money, bullion etc. belonged to such person The words in sub-section (4) are "may be presumed". The presumption under sub-section (4A) therefore, is a rebuttable presumption. The finding recorded by the High Court in the impugned judgment that the presumption under sub-section (4A) is a irrebuttable presumption in so far as it relates to the passing of an order under sub-section (5) of Section 132 and rebuttable presumption for the purpose of framing a regular assessment is not correct. There is nothing either in Section 132 or any other provisions of the Act which could warrant such an inference or finding.”

b. ITO vs. T. Abdul Majeed [169 TTR 440 (Ker)] held that,

"It is true that s. 132(4A) of the Act enables the Court to presume the truth of the contents of such books. However, it is a presumption which can be rebutted. Moreover, the presumption envisaged therein is only a factual presumption. It is in the discretion of the Court, depending upon other factors, to decide whether the presumption must be drawn. The expression used in the sub-section is 'may be presumed’ as is used in s. 114 of the Evidence Act, 1872. It is not a mandate

ITA No. 663/Del/2021 51 PSK Finance Solutions Pvt. Ltd. that whenever the books of account are seized, the Court shall necessarily draw the presumption, irrespective of any other factors which may dissuade the Court from doing so."

c. CIT vs. Tips Industries Pvt. Ltd. [321 ITR 154 (Bom)] held that,

“In these circumstances, the explanation given by the assessee being reasonable and possible, the decision of the Tribunal in accepting the contention of the assessee cannot be faulted. As held by the apex Court in the case of P.R. Metrani vs. CIT (2006) 206 CTR (SC) 290 : (2006) 287 ITR 209 (SC), the presumption under s. 132(4A) is a rebuttable presumption and in the present case, the assessee has successfully rebutted the presumption. In these circumstances, the fourth question raised by the Revenue cannot be said to be a substantial question of law arising out of the order of the Tribunal.”

6.2 The appellant would also like to place reliance upon the decision of Hon’ble Kerala High Court in the case of CIT vs. K.K. Abdul Kareem [132 CTR 431 (Kerala)] wherein it has been held that where the assessee had demonstrated that the cash found in his possession at the time of search, in fact, belonged to some other person, then no addition could be made in the hands of the assessee merely because he was found to be in possession of the impugned cash. The relevant extract of the order passed by Hon’ble Kerala High Court is as under:

“32. Alternatively even assuming that mere fact of finding cash on the person of the assessee would give rise to the presumption and requiring us to consider the consequent situation as to whether the material on record provides proof of rebuttal. The conclusion could not be contrary to

ITA No. 663/Del/2021 52 PSK Finance Solutions Pvt. Ltd. the one reached by the two authorities below, when not only that there is no material to connect the assessee and his companion with the cash amount except that it was found on their person. The material on record discussed hereinbefore leaves no manner of doubt that the ownership is traceable to other persons and not the assessee ir his companion in any manner. If the material on record is bit sufficient, any rebuttal of the presumption, there can be no other matter providing material for rebuttal in regard thereto.”

6.3 In view of the above facts and ratio consistently laid down by Hon’ble Courts in the judicial decisions cited, the appellant submits that the addition of Rs.4,37,50,000/- made by the A.O. in the instant case solely on the basis of the statement u/s 132(4), ignoring the fact that the said statement has been subsequently retracted and the appellant has duly demonstrated with substantiating evidences that the impugned cash represents unaccounted income of another person who has also offered it to tax as his undisclosed income in the return filed post search, is not justified on facts and in law.

Other reasons stated by the A. O. for rejecting the claim of the appellant are also not justified.

ITA No. 663/Del/2021 53 PSK Finance Solutions Pvt. Ltd. submits that the above reason stated by the A.O. for rejecting the claim of the appellant is not justified. In this respect, it is to be noted that the details as to how Mr. Jai Saxena was associated with the affairs of the appellant company were already furnished by the Director, Mr. Atul Mohan in his statement dated 27.08.2015. In the said statement, Mr. Mohan had stated that Mr. Saxena was their family friend since past 15 years. It was stated that Mr. Saxena was engaged in software development business and real estate business since past few years. It was stated that in the year 2013, Mr. Saxena exited from the software business by selling off majority stake in Software Company promoted by him. It was submitted that thereafter the appellant company had taken his advice for investing in properties and marketing of properties around Bangalore and Noida.

7.1] Subsequently, the statement of Mr. Jai Shiv Saxena was also recorded on 11.09.2015 post the survey action u/s 133A conducted in this case. In the said statement, Mr. Saxena had stated that after 2013, he had incorporated a firm named Blackrock Projects and Investment which was engaged in the real estate business at Bangalore. In the said statement, he has further stated that Mr. Atul Mohan was his family friend staying in New Delhi and hence, Mr. Saxena had supported Mr. Mohan to expand the business of the appellant company in and around Bangalore region. Mr. Saxena has stated that his role was mainly limited to identification of properties for making investment. Mr. Saxena has also stated that the flat at 602, MB, Golden Grand, Bangalore was used for official purposes of the appellant company and being the local guardian of the appellant

ITA No. 663/Del/2021 54 PSK Finance Solutions Pvt. Ltd. company, it was in his custody since September 2014. In the said statement, Mr. Jai Saxena has further stated that the cash amounting to Rs.4.58 crores received by him on sale of shares of the company, EAFT Technologies Pvt. Ltd. was utilized by him in bits and pieces to make investment in the property identified for investment for the appellant company and also in his individual capacity. He has stated that cash of Rs.4,37,50,000/- found at the premises of the appellant company on 05.08.2015 represented his unaccounted income from sale of shares earned in 2014 which was subsequently invested in bits and pieces in property transactions relating to the appellant company and in his individual capacity. It was stated that Mr. Saxena had identified a new Start Up company based in Bangalore for making investment and he needed cash for the said purposes in 2015 and hence, the cash investment made by Mr. Saxena was disinvested/ received back by him during the period from May 2015 to July 2015. It was stated that the said cash totaling to Rs.4,37,50,000/- belonging to Mr. Saxena was found in the course of search action conducted on premises of the appellant company in August 2015.

7.2] The moot point to be noted here is that in his statement, Mr. Saxena had stated that he had also received return on the above cash investment made by him in the properties identified for investment for the appellant company. It was stated that as per the oral understanding with Mr. Atul Mohan, he used to get return on such investment at the average rate of 18-20% from the appellant company. He has stated that such returns are also included in the cash amount of Rs.4,37,50,000/- belonging to him found during the course of search. Now, it is to be noted

ITA No. 663/Del/2021 55 PSK Finance Solutions Pvt. Ltd. that on the basis of such statement given by Mr. Saxena, the A.O. i.e. DCIT, Central Circle-28, New Delhi who has also passed the asst, orders u/s 147 for A.Y. 2014-15 in the case of Mr. Jai Saxena has made the addition of Rs.38,95,800/- as income derived from unaccounted investments made with PSK Finance Solutions Pvt. Ltd. i.e. the appellant company. The copy of the impugned asst, order in the case of Jai Shiv Saxena for A.Y. 2014-15 is enclosed herewith. Accordingly, the assessee submits that in the case of Mr. Jai Saxena, the Dept, has accepted the fact that Mr. Jai Shiv Saxena had business connection with the appellant company and that he had earned unaccounted income of Rs.38,95,800/- in respect^ of the investments made in cash with the appellant company and the Dept, has also levied tax in the hands of Mr. Saxena on the basis of the said stand. Therefore, the appellant submits that having taken this stand in the case of Mr. Jai Saxena, the Dept, cannot take a contrary stand in the case of the appellant company to hold that there was no business connection between appellant company and Mr. Jai Saxena. Accordingly, the assessee submits that the above reason stated by the A. O. for rejecting the claim of the appellant is not justified.

7.3] The assessee would like to raise a very pertinent issue to demonstrate as to how the above contention raised by the A.O. is apparently incorrect. In this regard, it is submitted that the A.O. has stated that the appellant has not proved the business connection between Mr. Jai Saxena and the appellant company and therefore, the A.O. has presumed that the said cash seized from the premises of the appellant company cannot be said to be belonging to Mr. Saxena. At the outset, the assessee submits

ITA No. 663/Del/2021 56 PSK Finance Solutions Pvt. Ltd. that the business connection between the appellant company and Mr. Jai Saxena is already explained in view of the facts stated in paras 7.1 and 7.2 above. Even otherwise, it is submitted that had there been no connection between the appellant company and Mr. Jai Saxena, that is to say that, if the impugned cash actually belonged to the appellant company and not to Mr. Jai Saxena as presumed by the A.O., then it is to be appreciated that in no scenario, the appellant company would have left its claim of ownership on such huge amount of cash. It is to be appreciated that if the cash had actually belonged to the appellant company, then it would have been certainly beneficial for the appellant to admit the same as undisclosed income and retain the balance quantum of cash after payment of taxes @ 30% on such cash. It is to be noted that in such a scenario, the appellant would have been liable to pay taxes @ 30% or the seized cash of Rs.4.37 crores, which would work out to around Rs.1.31 crores whereas the appellant would have been able to retain its ownership on the balance quantum of cash of Rs. 3.06 crores, which is certainly a huge amount. Thus, it is to be appreciated that if the seized cash of Rs.4.37 crores was actually owned/ belonged to the appellant company, then there was no question of the appellant company relinquishing its right on the entire amount of cash just for the sake of avoiding payment of taxes.

7.4] It is to be noted that in view of the constant assertions made by the appellant company before the Authorities without raising any objection to the claim of ownership of the impugned seized cash ma by Mr. Jai Saxena, the appellant company has affirmed that it has right of ownership in the entire sum of

ITA No. 663/Del/2021 57 PSK Finance Solutions Pvt. Ltd. Rs.4.37 crores found at the premises of the appellant company. In view of the above facts, assessee submits that if the said cash of Rs.4.37 crores found at premises of the appellant company actually belonged to the appellant and not to Mr. Saxena, then the appellant company would certainly not have left/ foregone its claim of ownership on the entire amount of cash merely for the sake of avoiding payment of taxes thereon. In view of the above facts, it is reiterated that the second reason stated by the A.O. to presume that the seized cash belonged to the appellant company and not to Mr. Jai Saxena, is apparently incorrect on facts of the case. Hence, the assessee submits that the addition of Rs.4,37,50,000/ - made by the A.O. on the basis of incorrect presumption is not justified at all.

8] The third and the last reason cited by the A.O. for rejecting the claim of the appellant is that the appellant has not filed the confirmation from the person who has purchased shares from Mr. Jai Saxena, which has resulted into earning of unaccounted cash income in the hands of Mr. Saxena. On this basis, the A.O. has stated that the claim made by the appellant that Mr. Jai Saxena had infact earned such huge unaccounted cash income of Rs.4.37 crores which was found at the premises of the appellant company is not substantiated by proper evidence and hence, the same needs to be rejected. The appellant submits that the above reason stated by the A.O. for rejecting the claim of the appellant is not justified on facts of the case. In this respect, it is to be noted that in the course of the consequential ^survey action u/s 133A conducted on 10.09.2015 on the premises of Mr. Jai Saxena, the agreement and MOU dated 11.02.2012 evidencing transfer of shares by Mr.

ITA No. 663/Del/2021 58 PSK Finance Solutions Pvt. Ltd. Saxena to company owned by UK based businessman, Mr. Arjun Vekaria was found and impounded. It is submitted that the fact that the shares were sold by Mr. Saxena to the said person is also evident from the Share transfer records available on the MCA portal. Further, the said fact has also been admitted by Mr. Jai Saxena in his statement recorded u/s 131 on 11.09.2015 by the Income Tax dept. The most important fact is that on the basis of the above declaration, the same A.O. i.e. DCIT, Central Circle 28, New Delhi has assessed the additional income on sale of above shares totaling to around Rs. 6 crores (which includes cash consideration of Rs.4.58 crores admitted by Mr. Jai Saxena) as income from Mr. Jai Saxena in the asst. orders passed u/s 147 for A.Y. 2014-15 and 2013-14 in his case. Therefore, once the Dept. has accepted the above stand in the case of Mr. Jai Saxena and has also recovered huge taxes from Mr. Jai Saxena on the basis of the above stand, the Dept, cannot take a contrary stand in the case of the appellant. It is submitted that such an action by the Dept. would amount to blowing hot and cold at the same time and the same would amount to violation of the principles of justice. In view of the above facts, the appellant submits that the third reason stated by the AO for rejecting the claim of the appellant is also not justified.

9] In view of the above facts and judicial decisions cited, the appellant submits that the addition of Rs.4,37,50,000/- made by the A.O. by treating the cash seized from the premises of the appellant company as unexplained income of the assessee on the basis of the statement u/s 132(4) is not justified and hence, it is prayed that the said addition may please be deleted.

ITA No. 663/Del/2021 59 PSK Finance Solutions Pvt. Ltd.

In case, any further clarification is required, the same would be submitted on hearing from Your Honour.”

8.2 Thereafter, on 27.08.2015, subsequent statement u/s 131 of Shri Atul Mohan was recorded at Bangalore at the Office of DDIT (Inv.), Unit - 1(1), Bangalore. In the said statement, Shri Atul Mohan stated that the cash amounting to Rs. 4,37,50,000/- found at the premises of the appellant company at Bangalore may have been kept by Shri Jai Shiv Saxena who was looking after the operations of the appellant company in Bangalore and who was also having the custody of the flat at 602MB, Golden Grand, Bangalore from where the said cash was seized.

ITA No. 663/Del/2021 60 PSK Finance Solutions Pvt. Ltd. 8.3 The appellant states that the operations of the appellant company were looked after mainly by Mr. Jai Shiv Saxena, who was a family friend of the Directors of the appellant company. Mr. Saxena was engaged in the business of real estate and he was based in Bangalore and hence, in view of the fact that all the directors of the appellant company were residing in Noida, the operations of the appellant company at Bangalore were looked after by Mr. Saxena. It has been submitted that in the initial statement u/s 132(4) recorded at Noida, Mr. Atul Mohan had stated that the impugned cash seized from the Bangalore premises of the appellant company was generated out of real estate transactions carried out by the appellant company. Further, on being asked regarding the sources of cash seized from the Bangalore premises, Mr. Atul Mohan stated that he was not in a position to furnish any documentary evidences to prove the generation of the above cash.

8.4 The appellant has further submitted that after visiting Bangalore, Mr. Atul Mohan verified the records of the appellant company and sought the details and evidences regarding sources of the cash seized from the Bangalore premises from Shri Jai Shiv Saxena and found out that the entire cash of Rs.4,37,50,000/- belonged to Mr. Jai Shiv Saxena. Thereafter, Shri Atul Mohan filed a letter dated 04.09.2015 with the DDIT (Inv.), Unit - 1, Bangalore clarifying that the impugned cash found at the Bangalore premises of the appellant company belonged to Shri Jai Shiv Saxena and the sources of earning the said cash by Mr. Saxena were also clarified in the said letter. It was stated that the above cash was earned by Mr. Saxena on sale of shares of a company and the said amount was not offered to tax by Mr. Saxena. Accordingly, it was stated that the impugned cash did not represent undisclosed income of the appellant company but the same represented undisclosed income belonging to Mr. Jai Shiv Saxena.

ITA No. 663/Del/2021 61 PSK Finance Solutions Pvt. Ltd. 8.5 A consequential survey operation u/s 133A of the Income Tax Act was conducted on the business premises of Shri Jai Shiv Saxena on 10.09.2015 at Office No. 135, B Brigade Garden, Church Street, Bangalore. During the course of the survey action, it was found that Mr. Saxena was looking after the operations of the appellant company at Bangalore since the year 2013.It was further noticed that prior to 2013, Shri Saxena was a promoter and shareholder in a company named, M/s. EAFT Technologies Pvt. Ltd. which was engaged in software development business. During the course of survey action, an agreement dated 11.02.2012 entered between EAFT Technologies Pvt. Ltd., the Promoters (including Mr. Saxena) and an Investor company, M/s. Mesostrefia Ltd. owned by one, Mr. Arjun K Vekaria, a UK based businessman, was found and impounded. An MOU entered between the above parties was also attached to the said agreement and the said MOU was also impounded. The said agreement and MOU contained details of sale of shares of EAFT Technologies Pvt. Ltd. executed by the promoters (including Mr. Saxena) to the company owned by Mr. Arjun Vekaria.

8.6 During the course of the survey proceedings u/s 133A, the statement of Shri Jai Shiv Saxena was recorded u/s 131 on 11.09.2015 wherein he was questioned regarding the sale of shares made as per the above impounded agreement and whether the same was offered to tax by him. In his statement recorded on oath, Mr. Jai Saxen admitted that he had received total consideration of Rs. 6,25,97,924/- on sale of shares to Mr. Arjun Vekaria and his company during A.Y. 2013-14 and 2014-15. He stated that out of the said consideration, Rs. 4,58,29,664/- was received in cash whereas the balance amount of Rs. 1,67,68,260/- was received through banking channel. Mr. Saxena further stated that he was looking after the operations of the appellant company at Bangalore and that the premises owned by the appellant company at Flat No.602 MB, Golden Grand, Bangalore was in his possession. In the said statement, Mr.

ITA No. 663/Del/2021 62 PSK Finance Solutions Pvt. Ltd. Saxena admitted that the cash of Rs. 4,37,50,000/- seized from the above premises belonged to him and that the same was earned out of sale of shares of EAFT Technologies Pvt. Ltd. which was not offered to tax by him.”

The relevant parts of the said statement of Mr. Jai Saxena recorded u/s 131 of the Acton 11.09.2015 are as under:

“Q.13. As per you reply to Q.12, you have sold only 23168 shares as against your holding of 3,36,000 shares. Please state what happened to the share holding. You are also required to furnish the complete details in this regard.

Ans.: Sir, after the first sale of23168 shares, I have sold around 35000 shares to Shri Vikram Bhargav during 2013 at the rate of Rs.10 per shares totaling to Rs.3,50,000/-. This sale was an indirect commission to Mr. Bhargav wherein he has received share worth Rs.363.29 per share at price of only Rs. 10 per share with an understanding as Mr. Bhargav was mediating for sale of company's sharers from three directors to Mr. Arjun Wakaria for valuable consideration as he was close associate of Mr. Arjun Vakaria. In facts, all the three of us have sold to Mr. Bhargav 35000 shares each at Rs. 10 per share.

Further, after this transaction, I sold 55567 shares and 92610 shares to Mr. Arjun Vakaria at Rs. 250 per shares in which the realisation was around Rs.80 lakhs through cheques and around Rs. 3 Crore in cash. The exact amount which I have received in cheques is reflected in my bank statement. The reason for selling at the lesser price was that I needed cash to my real estate venture. Hence the deal was struck for Rs. 250 per share. For the said transactions, I have also not paid any capital gain tax as I was under the impression that the capital gain tax will not attract once I hold the shares for more than a year. At present 1,29,655 shares are under my possession.

ITA No. 663/Del/2021 63 PSK Finance Solutions Pvt. Ltd. Q.14. I am drawing your attention towards the shareholders agreement dated 11.02.2012, notice, special resolution dated 02.03.2012 and also your answer to Q. No.11, wherein it is noticed that the share price was fixed at Rs. 363.29 per equity share and you have also received Rs.84,16,702.72/-by way of cheque/bank transfer. In this background and your response to Q.No.12 wherein you have stated that you have received cash also for transfer of shares. Explain with credible documentary evidences that you have received only Rs.250/- per share for sale of 148177 equity shares to the same person Mr. Arjun Vakaria who also controls M/s Meaostrefia Limited which had purchased your shares at Rs. 363.29/- per share. In this regard why the same price of Rs. 363.29 should not be adopted as sale price for 148177 equity shares sold to the same person in which cash of Rs.4,58,29,664.33/- was received as against Rs.3 crore cash which you have stated in the earlier reply.

*Rs. 4,58,29,664.33/- is worked out at Rs.309.29 per share [Rs.363.29 minus Rs.54 (which was received by cheque)].

Ans.: Sir, as per the original MoU referred by you it can be seen that the first sale price then was fixed on the basis of performance of the company and its future earnings. As of now, I not able to produce any credible documentary evidences in support of my claim that I have received only Rs.250/- per shares w.r.t. sale. Hence, I am voluntarily offering Rs.458,29,66,433/- which is received in cash and also Rs.1,67,68,260/- as my undisclosed income for the respective financial year under the head capital gain.

*calculation for Rs. 1,67,68,260/- is sum of Rs.84,16,702/- which was received during first sale of 23168 shares and Rs 3,50,000/- for sale of 35000 shares to Mr. Vikram Bhargav and Rs 80,01,558/ for sale of 148177 shares at Rs.54 per share during second sale to Mr. Arjun Vakaria.

ITA No. 663/Del/2021 64 PSK Finance Solutions Pvt. Ltd. Q.20. Do you know company by name M/s PSK Finance Solutions Pvt. Ltd. If yes, please state how you or your entities are related to it.

Ans.: Yes, I know M/s PSL Finance Solutions Pvt. Ltd. being a family friend of Mr. Naresh Mohan and Mr. Atul Mohan who stayed in Noida, U.P., I came in touch with this company for the real estate business purposes. As this company is in the business of real estate, Mr. Atul Mohan and myself joined together to expand the real estate business in NCR region as well as in and around Bangalore under M/s PSK Finance Solutions Pvt. Ltd.

Q.21. Since how long you are associated with M/s PSL Finance Solutions Pvt. Ltd. and from which premise of the said company you are managing the operation.

Ans.: Sir, I have stated earlier that in the year 2013 I came into the business of real estate. During this period only I came in contact with above said company with the view of expanding its real estate business in Bangalore as I am residing in Bangalore and well versed with the real estate market trend in and around Bangalore. With the said view, Mr. Atul Mohan who looks after all the business affairs of this company, shown interest and belief on me as I am his family known friend, started expanding company business in Bangalore.

Sir, in Bangalore, company owns a flat at No. 602 MB, Golden Grand, Yeswanthpur, Bangalore which we have made company’s office to control Bangalore business affairs.

Q.27. Please who are having the access to the flat at 602 MB, Golden Grand, Yeswanthpur, Bangalore which is owned by M/s. PSK Finance Solutions Pvt. Ltd.

Ans.: Sir, the keys of flat are only with me and Mr. Atul Mohan.

ITA No. 663/Del/2021 65 PSK Finance Solutions Pvt. Ltd. Q.28. I am drawing your attention towards the seizure done by Economic Offence Division, CID, Bangalore during the course of search at 602 MB, Golden Grand, Yeswanthpur, Bangalore on 05.08.2015. During the search the said authority ban seized a cash of Rs. 4,37,50,000/- from said premise. Please state who has kept this cash at said premise and when.

Ans.: Sir, I have been using the premise since September 2014 onwards for day to day operations of PSK Finance Solutions Pvt. Ltd. As I was the local care taker of the said company and also I had an internal understanding between Atul Mohan and Naresh Mohan regarding the company operation in and around Bangalore. I used to identify and finalize the investments in properties in and around Bangalore. As stated above, I had received cash from sale of my shares which I invested in PSK Finance Solutions Pvt. Ltd. in bits and pieces over a period of 2 years. In my personal capacity also, I used to invest in properties.

The said cash of R.s. 4,37,50,000/- was kept by myself in the above said flat an different occasion from May 2015 to July 2015. The said money was received from different financial transactions and properties transactions made by myself and Mr. Atul Mohan on behalf of PSK Finance Solutions Pvt. Ltd.

Q.29. Kindly elaborate your reply given to Q. No. 28, explaining where, when and how you have made the investments in PSK Finance Solutions Pvt. Ltd. and also furnish agreement/MoU is made for your investment in the said company.

Ans.: Sir, PSK Finance Solutions Pvt. Ltd. is closely held by Mr. Naresh Mohan and his family members. I know this family from last 15 years, hence there was no written agreement or MoU made between us w.r.t. my said investment, in this company. Till today I have invested around Rs. 5.50 crore in cash front 2012. Rut, there was an oral understanding made wherein I would be getting 18% - 20% of return on my investment from

ITA No. 663/Del/2021 66 PSK Finance Solutions Pvt. Ltd. the company. The return was also fixed after each transaction made i.e. if I get the customer identify the land and do the ground work, my return would increase upto 22%-24%. But, in cases where Atul did the ground work, my return would reduce to 15%-16%. So, on an average my return would be around 18 to 20%. The above said cash is also included my returns on investment.

Q.30. Kindly explain why so much of cash (Rs. 4,37,50,000/-) was accumulated from May 2015 to July 2015?

Ans.: As I have stated in above reply that my investments were made over a period of 2 years from 2012 to 2014 in the said company. During 2015 April, it was decided that over a period of 6 months I would take back my investment alongwith my return as I had identified a startup company with the name of Reunion a Bangalore based company for which I would be requiring the said cash. Hence, the cash was accumulated. Q.31. I am showing you statement dated 20.08.2016 recorded from Mr. Atul Mohan oil oath. Please go through his reply to Q.No. 21 and 22 where he has given his explanation with regard to seizure of cash of Rs. 4,37,50,000/- and stated that the cash found and seized belongs to company M/s PSK Finance Solutions Pvt. Ltd. Please give your comments on it.

Ans.: Sir, in my earlier responses where I have stated that the cash has been accumulated for acquiring the startup company.

Q.32. Please give the break-up and details of investment of Rs.5.50 Crores alongwith the sources for the same.

Ans. Sir, As earlier stated I received about Rs.6.22 Crores on account of sale of shares in total, in which Rs. 1.64 Crores was by way of cheques and the balance of Rs.4.58 Crore by way of cash. Out of this I have incurred expenses for my personal drawings etc. of about Rs.20 Lakhs, I have placed fix deposit of Rs.30 Lakhs and I have paid towards down payment and loan

ITA No. 663/Del/2021 67 PSK Finance Solutions Pvt. Ltd. repayment on my cars to the tune of Rs.20 Lakhs during the period May 2012 to August 2014 and also I had given some personal loans through cheque to some of my friends for which I would furnish the details shortly.

Q.33. As per your reply to Q.No.32, wherein you have stated that you have placed a fixed deposit of Rs. 30 Lakhs. Please give the details of bank and FD made. Also state that whether have you offered interest income earned on said FD. If yes please furnish the details in support of the same.

Ans.: Sir, the said FD has been placed in Central Bank of India, Brigade Road in 2013. The details will be furnished in due course. Sir, I don’t think that I have offered interest income earned on said FD. In case it is not declared, I will declare the same and pay the tax accordingly.

A.34. As per your reply to Q. No. 29, you have stated that you have received around 18-20% as return on your investment for Rs. 5.50 Crore, kindly state whether the said return has been offered for taxation. If not, why the same should not be calculated at 19% net of expenses for FY 2012-13, 2013-14 and 2014-15.

Ans.: Sir, I have not offered the return on investment @19% in any of my income tax returns. I had not utilized this return on investment for my personal use, and the return on investment was re-deployed in the company itself. Kindly give me 2 days time to work out the same year wise as I did not invest full Rs.5.50 Crores at one go, rather I had invested the cash in the company as and when I received cash from sale of my shares. I would declare the same in my return of income and pay the taxes accordingly.”

ITA No. 663/Del/2021 68 PSK Finance Solutions Pvt. Ltd. 29.07.2016 wherein the additional income on account of long term capital gains on sale of the above shares (including the undisclosed cash consideration of Rs.4,58,29,664/-) was offered to tax and since the cash found has been duly paid, the addition made in the hands of the company has been deleted.

“……..It is submitted that the assessment of Shri Jai Shiv Saxena for A.Y. 2013-14 and 2014-15 was reopened by the A.O. by issuing notice u/s 148 dated 31.03.2018. The asst, u/s 143(3) r.w.s. 147 in his case for the two years was completed on 24.12.2018. In the assessment orders passed in the case of Shri Jai Shiv Saxena, the A.O. has assessed the long term capital gains declared by Shri Jai Shiv Saxena (including the undisclosed cash consideration of Rs.4,58,29,664/-) as income of the Shri Saxena on the basis of the declaration given by Shri Saxena in his statement dated 11.09.2015. It has been pointed out by the appellant that the above assessment orders in the case of Jai Shiv Saxena were passed on 24.12.2018 whereas the assessment order in the case of the appellant company was passed on 29.12.2017. Therefore, the fact that the impugned undisclosed income on sale of shares (which formed the source of the cash seized at the premises of the appellant company) had been assessed to tax in the hands of Shri Jai Shiv Saxena by the A.O. in his assessment, was not in the knowledge of the A.O. of the appellant company who passed the assessment order of the appellant of this year u/s 143(3) on 29.12.2017.

8.9 The appellant has claimed that the impugned cash found was the unaccounted income of Mr. Jai Shiv Saxena and the same did not represent the unaccounted income earned by the appellant company. In this regard, it has been submitted that the initial declaration made by Mr. Atul Mohan in the statement dated 20.08.2015 was given without full knowledge of facts and not consulting the relevant person i.e. Mr. Jai Shiv Saxena who was looking after the operations of the appellant company in Bangalore. It

ITA No. 663/Del/2021 69 PSK Finance Solutions Pvt. Ltd. was further stated that the said statement was immediately retracted vide letter dated 04.09.2015 filed with the DDIT (Inv.), Bangalore, wherein it was stated that the impugned cash represented unaccounted income of Mr. Jai Shiv Saxena, earned by him from sale of shares and was not the unaccounted income of the appellant company.

8.10 Mr. Saxena had owned up the said cash and had admitted that the said cash represented his unaccounted income which was earned by him on sale of stake/shareholding of a company. An Agreement and MOU dated 11.02.2012 for transfer of shareholding by Mr. Saxena to UK based businessman was found and impounded in the course of survey action u/s 133A conducted on the premises of Mr. Saxena. The appellant has submitted that the fact of Mr. Saxena having earned unaccounted income on sale of shares was also corroborated by other documentary evidences like share transfer records obtained from MCA portal, bank statement of Mr. Saxena etc. Therefore the appellant states that there was no reason to treat the said cash as undisclosed income of the appellant company.

8.11 The appellant further states that as against the substantiating evidences found at the premises of Mr. Saxena to prove that the impugned undisclosed cash represented unaccounted income earned by him, no evidences, whatsoever, were found in the course of the search action at the premises of the appellant company to indicate that the appellant company had earned the said unaccounted cash income. It was submitted that the appellant company was incorporated in April 2012 and prior to the date of seizure of cash i.e. 05.08.2015, the appellant company had not sold any immovable property and therefore, it was not possible that the appellant company could have earned such undisclosed income of Rs.4.37 crores from any other source. In view of the above facts, the appellant stated that the seized cash belonged to Mr. Jai Saxena and the same should be treated as undisclosed income in the hands of the appellant Company. The said amount was already offered to tax as additional income in the hands of Mr. Jai Shiv Saxena in the revised return filed by him.

8.12 The A.O. has mainly relied upon the initial statement of Shri Atul Mohan recorded at New Delhi on 20.08.2015 wherein he had stated that the said cash seized from Bangalore premises of the appellant company

ITA No. 663/Del/2021 70 PSK Finance Solutions Pvt. Ltd. belonged to the appellant company and the same represented undisclosed income earned from real estate transactions. Shri Atul Mohan retracted the above statement vide letter dated 04.09.2015 addressed to the DDIT - Investigation, Unit-1, Bangalore. The appellant submits that the reliance placed upon by the A.O. on the said statement, by ignoring the subsequent retraction, explanation & evidences furnished by the appellant and admission made by Shri Jai Saxena, was misplaced.

8.13 It is to be noted that the said fact was also accepted by Mr. Jai Saxena who claimed that the said cash belonged to him. It is submitted that Mr. Saxena had also disclosed the sources through which he had earned the impugned unaccounted cash. The substantiating evidences in support of his claim were also found in the course of consequential survey proceedings u/s 133A conducted by the Dept, on the premises of Jai Saxena on 10.09.2015. Mr Saxena had stated that he was looking after the operations of the appellant company in Bangalore and was having the custody of the premises at Flat No.602 MB, Golden Grand Appt., Bangalore. In the said statement, he had categorically admitted that the cash of Rs.4,37,50,000/- seized from the said premises belonged to him and the same was sourced out of unaccounted income earned by way of sale of stake/ shareholding in a company wherein he was a promoter. The said unaccounted income by way of cash seized from the premises of the appellant company was also offered to tax by Mr. Saxena by filing revised returns. The A.O. has assessed unaccounted income on sale of shares to the tune of Rs.5,38,31,222/- and Rs.84,16,702/- in the asst, orders passed u/s 147 in the case of Mr. Jai Shiv Saxena for A.Y.2014 - 15 and A.Y.2013 - 14 respectively.

8.14 It is a fact that the appellant company was incorporated on 27.04.2012. It is submitted that till the date of search i.e. 5th August 2015, the appellant company had not sold any immovable property. Further, in the total income assessed by the A.O. for earlier years is as follows - A.Y. 2013-14 : Loss (Rs.36,240/-), A.Y. 2014-15 : Rs. 11,14,300/- [A.O. had made addition of Rs.26,32,185/- in respect of deemed dividend over and above Rs. 11,14,300/-, which has been deleted by CIT(A)], A.Y. 2015-16 : Rs. 10,87,420/-. Thus, in view of the quantum

ITA No. 663/Del/2021 71 PSK Finance Solutions Pvt. Ltd. of income returned by the appellant company for the earlier years and especially in view of the fact that the appellant has not entered into any real estate transaction of sale of immovable property till the date of seizure of cash from its inception, it was impossible for the appellant company to have earned such unaccounted cash income of Rs. 4,37,50,000/- from any other sources since its incorporation. Thus, it is submitted that in view of the above facts, the initial assertion made by Mr. Atul Mohan in his statement dated 20.08.2015 was factually incorrect.

8.15 In this regard, the appellant has relied upon the ratio laid down by Hon’ble Delhi High Court in the case of CIT v. Sunil Aggarwal [379 ITR 367]' wherein it has been held that where the assessee had retracted from the earlier declaration given by him in the statement u/s 132(4) by furnishing a reasonable explanation and substantiating evidence in support of the retraction/ subsequent claim, then in such circumstances, no addition can be made by the A.O. on the basis of the statement u/s 132(4) of the Act. The appellant submits that in the instant case, the retraction was made by the appellant within 15 days from recording the initial statement dated 20.08.2015. Further, the Director has explained that the initial statement was recorded at New Delhi and before recording the said statement, the Director had not verified the records and he had also not consulted/ obtained proper information from Mr. Jai Saxena, who was handling the operations of the appellant company at Bangalore from the flat wherefrom the impugned cash was seized. Thus, it was explained that the initial statement was given under confusion and misinterpretation of facts. The Director explained that on visiting Bangalore, after proper verification of records and obtaining information from Mr. Jai Saxena, it was realized that the said cash found at Bangalore belonged to Mr. Jai Saxena and it was not related to the operation of the appellant company. Further, the appellant also explained that the appellant company had been incorporated only three years ago and only nominal income was assessed for the earlier three years and therefore, in view of the fact that the appellant company had not sold any immovable property till the date of seizure of cash since its inception, therefore it was impossible that the appellant company could have earned such unaccounted cash income of Rs.4.37 crores since its incorporation. Thus, the appellant substantiated

ITA No. 663/Del/2021 72 PSK Finance Solutions Pvt. Ltd. the fact that initial declaration made by it was not correct. The appellant further submits that the A.O. has not brought any corroborative evidence on record to disprove the claim of the appellant.

8.16 The A.O. has stated that the appellant had not furnished any documentary evidences to prove that Mr. Jai Saxena was looking after the operations of the appellant company at Bangalore and the flat at 602, MB, Golden Grand Appt., Bangalore wherefrom the impugned cash was seized, was used by him for the purposes of the company. It is seen that the details as to how Mr. Jai Saxena was associated with the affairs of the appellant company were furnished by the Director, Mr. Atul Mohan in his statement dated 27.08.2015 wherein Mr. Mohan had stated that Mr. Saxena was their family friend since past 15 years. It was stated that Mr. Saxena was engaged in software development business and real estate business since past few years. It was stated that in the year 2013, Mr. Saxena exited from the software business by selling off majority stake in software company promoted by him. It was submitted that thereafter, the appellant company had taken his advice for investing in properties and marketing of properties around Bangalore and Noida.

8.17 Subsequently, the statement of Mr. Jai Shiv Saxena was also recorded on 11.09.2015 post the survey action u/s 133A conducted in this case. In the said statement, Mr. Saxena had stated that after 2013, he had incorporated a firm named Blackrock Projects and Investment which was engaged in the real estate business at Bangalore. In the said statement, he has further stated that Mr. Atul Mohan was his family friend staying in New Delhi and hence, Mr. Saxena had supported Mr. Mohan to expand the business of the appellant company in and around Bangalore region. Mr. Saxena has stated that his role was mainly limited to identification of properties for making investment. Mr. Saxena has also stated that the flat at 602, MB, Golden Grand, Bangalore was used for official purposes of the appellant company and being the local guardian of the appellant company, it was in his custody since September 2014. In the said statement, Mr. Jai Saxena has further stated that the cash amounting to Rs.4.58 crores received by him on sale of shares of the company, EAFT Technologies Pvt. Ltd. was utilized by him in parts to make investment in the properties

ITA No. 663/Del/2021 73 PSK Finance Solutions Pvt. Ltd. identified for investment for the appellant company and also in his individual capacity. He has stated that cash of Rs. 4,37,50,000/- found at the premises of the appellant company on 05.08.2015 represented his unaccounted income from sale of shares earned in 2014 which was subsequently invested in parts in property transactions relating to the appellant company and in his individual capacity. It was stated that Mr. Saxena had identified a new Start Up company based in Bangalore for making investment and he needed cash for the said purposes in 2015 and hence, the cash investment made by Mr. Saxena was disinvested/ received back by him during the period from May 2015 to July 2015. It was stated that the said cash totaling to Rs. 4,37,50,000/- belonging to Mr. Saxena was found in the course of search action conducted on premises of the appellant company in August 2015.

8.18 The A.O. has stated that the appellant has not filed the confirmation from the person who has purchased shares from Mr. Jai Saxena, which has resulted into earning of unaccounted cash income in the hands of Mr. Saxena. On this basis, the A.O. has stated that the claim made by the appellant that Mr. Jai Saxena had in fact earned such huge unaccounted cash income of Rs.4.37 crores which was found at the premises of the appellant company was not substantiated by proper evidence and hence, the same was to be rejected. The appellant submits that the above reason stated by the A.O. for rejecting the claim of the appellant was not justified on facts of the case. In this respect, it is to be noted that in the course of the consequential survey action u/s 133A conducted on 10.09.2015 on the premises of Mr. Jai Saxena, the agreement and MOU dated 11.02.2012 evidencing transfer of shares by Mr. Saxena to company owned by UK based businessman, Mr. Arjun Vekaria was found and impounded. It is submitted that the fact that the shares were sold by Mr. Saxena to the said person was also evident from the Share transfer records available on the MCA portal. Further, the said fact has also been admitted by Mr. Jai Saxena in his statement recorded u/s 131 on 11.09.2015. It is a fact is that on the basis of the above declaration, the same A.O. i.e. DCIT, Central Circle 28, New Delhi has assessed the additional income on sale of above, shares totaling to around Rs.6 crores (which includes cash consideration of Rs.4.58 cr. admitted by Mr. Jai Saxena) as income of Mr.

ITA No. 663/Del/2021 74 PSK Finance Solutions Pvt. Ltd. Jai Saxena in the asst, orders passed u/s 147 for A.Y. 2014-15 and 2013- 14 in his case.

8.19 The appellant has submitted that the impugned cash was earned by Mr. Jai Saxena in the months of June and July, 2013 i.e. during A.Y.2014- 15 by way of sale of his shareholding in the company, M/s. EAFT Technologies India Pvt. Ltd., Bangalore to a UK based businessman, Mr. Arjan Vekaria. Mr. Saxena had earned total undisclosed cash consideration of Rs. 4,58,29,664/- on sale of these shares during A.Y.2014-15 and out of the same, the cash to the tune of Rs.4,37,50,000/- was kept by him in the above flat owned by the appellant company. It is seen from the submissions that during A.Y.2014-15, Mr. Saxena had sold 55,567 shares to Mr. Vekaria on 02.06.2013 and 92,610 shares on 09.07.2013, total no. of shares sold being 148,177. These shares were sold @ Rs.363.29/- per share and thus, the total sale consideration received by Mr. Saxena was Rs. 5,38,31,222/-. Out of the same, consideration worked out @ Rs.54/- per share i.e. Rs. 80,01,558/- was received by Mr. Saxena through banking channel whereas the balance consideration of Rs. 4,58,29,664/- was received in cash.

8.20 In this regard, reference has been made to reply to Q.13 & 14 of statement u/s 131 of Mr. Jai Saxena dated 11.09.2015. Upon perusal of the replies given by Mr. Saxena to Q.13 8b 14 of the said statement, it is noticed that Mr. Saxena admitted that he had transferred total of 148,177 shares [55567 + 92610] to Mr. Vekaria in A.Y. 14-15 against which he had received total sale consideration of Rs. 5,38,31,222/-. He further admitted that out of the same, consideration of Rs.80,01,558/- was received through banking channel whereas the balance consideration of Rs.4,58,29,664/-was received in cash.

8.21 In Reply to Q. Nos. 20, 21, 27 to 31 8B 34 of his statement u/s 131 dated 11.09.2015, Mr. Jai Saxena has admitted that the cash of Rs.4,37,50,000/- seized from the flat at Bangalore owned by the company, M/s. PSK Finance Solutions Pvt. Ltd. on 05.08.2015 belonged to him, clarified the reasons due to which the said cash belonging to him was kept by him in the impugned premises belonging to PSK Company and also explained the source of the said cash of Rs.4.37 Crs. belonging to him

ITA No. 663/Del/2021 75 PSK Finance Solutions Pvt. Ltd. which was seized in August, 2015, by way of clarifying that the said cash was sourced out of the undisclosed cash consideration of Rs.4,58,29,664/- received by him on sale of shares of EAFT Company made to Mr. Arjun Vekaria.

Further, in replies to the above questions, Mr. Saxena has also disclosed the details regarding trail of the said undisclosed cash of Rs.4.58 Crs. from the date of its receipt upon sale of shares upto the date of its seizure on 05.08.2015. In these replies, Mr. Saxena has disclosed the details as to where the said undisclosed cash consideration of Rs.4.58 Crs. reed, on sale of shares was invested by him during the period from 2013 to 2015 and how the said cash was available with him in August, 2015.

8.22 On the basis of the said reply and after perusing the relevant records, the A.O. in the case of Mr. Jai Saxena has made the addition of Rs. 5,38,31,222/- towards undisclosed income on sale of shares in para 6, sub para (ii) on page 21 of the assessment order u/s 147 passed for A. Y 2014 — 15 in case of Mr. Jai Saxena. It may noted that the total sale consideration received by Mr. Jai Saxena upon sale of shareholding made to Mr. Arjan Vekaria and his company during A.Y. 2013-14 and 2014-15 was Rs.6,25,97,924/-. Out of the same, Rs. 1,67,68,260/- was received through banking channel whereas balance consideration of Rs.4,58,29,664/- was received in cash during June and July, 2013 as clarified above. The entire sale consideration of Rs. 6,25,97,924/-received by Mr. Jai Saxena was undisclosed in the original ITRs filed before survey. Accordingly, the entire sale consideration has been taxed by the A.O. of Mr. Jai Saxena as undisclosed income in his hands by making addition of Rs. 84,16,702/- in the assessment order u/s 147 passed for A.Y. 2013-14 and additions of Rs. 5,38,31,222/- and Rs. 3,50,000/- in the assessment order u/s 147 passed in case of Mr. Saxena for A.Y. 2014-15.

8.23 As discussed above, Mr. Jai Saxena admitted that the undisclosed cash consideration of Rs. 4.58 Crs. received by him aroKGadsdune & July, 2013 upon sale of shares of EAFT Co., was invested by him in bits and pieces over a period upto 2014 into real estate transactions through PSK Company. Mr. Jai Saxena has further admitted to have received return on such cash investments made in real estate transactions over the relevant

ITA No. 663/Del/2021 76 PSK Finance Solutions Pvt. Ltd. period of around two years. Mr. Jai Saxena has also admitted that in April, 2015, he had identified a Bangalore based startup company named ‘Renuion’ for investment and he needed the impugned cash for making investment in the said company. Therefore, during April 2015, he decided to withdraw the cash investments made in real estate transactions through PSK over a period of next six months in order to invest the said proceeds into the new startup venture. Accordingly, in the months of-May to July, 2015, Mr. Jai Saxena had accumulated cash of Rs. 4,37,50,000/- from withdrawal of the impugned cash investments made in real estate transactions through PSK and the said cash was kept by Mr. Jai Saxena at the searched premises i.e. flat at 602 MB, Golden Grand, Bangalore. In this regard, Mr. Jai Saxena had also clarified that the said flat was in his custody since September, 2014 in the capacity of local guardian at Bangalore looking after real estate operations of PSK company around dore since all the directors of the company were based in Noida.

8.24 In view of the above facts and judicial decisions cited, 'the addition of Rs.4,37,50,000/- made by the A.O. by treating the cash seized from the premises of the appellant company as unexplained income of the assessee on the basis of the statement u/s 132(4) is unjustified. The said unexplained income, as detailed above has been accepted as the additional income by Mr. Jai Saxena and the said amount has been assessed u/s 147 for A.Y. 2014-15. Further it is seen that Mr. Jai Saxena has opted for Vivad Se Vishwas Scheme 2020 regarding the appeal pending against the said assessment order u/s 147 for the assessment year 2014-15, has paid the due taxes and has withdrawn the appeal in his case for the A.Y. 2014- 15. It is held on the basis of the detailed discussion above and the facts of the case that the said cash seized of Rs. 4,37,50,000/- belongs to Mr. Jai Saxena for the assessment year 2014-15, and not of the appellant. Accordingly, the said addition of Rs. 4,37,50,000/- made in the hands of the appellant is hereby deleted. The appellant gets relief on these grounds of appeal.

ITA No. 663/Del/2021 77 PSK Finance Solutions Pvt. Ltd. 9. Before us, the ld. DR relied on the order of the Assessing Officer and the ld. AR, on the order of the ld. CIT(A).

 The appellant is a domestic company.  A search action was carried out by the Economic Offence Wing of CID, Bangalore on the 05.08.2015 on the assessee group.  An amount of Rs.4,37,50,000/- found during the search in the premises of the company.  The Assessing Officer made addition of the cash found during the search of Rs.4,37,50,000/- in the hands of the assessee.  The basis of the addition was the statement recorded on oath u/s 132(4) of Sh. Atul Mohan, Director of the company on 20.08.2015 wherein he stated that the cash belongs to the company and not accounted. The AO held that the statement was reaffirmed on 27.08.2015.  A survey u/s 133A was conducted on the business premises of Sh. Jai Shiv Saxena on 10.09.2015.  Statement recorded u/s 131, Sh. Saxena admitted that he has received total consideration of Rs.6,25,97,924/- on sale of shares.  Sh. Saxena admitted that he is the promoter and shareholder in the company named EAFT Technologies Pvt. Ltd. and the said shares were sold to Mr. Arjun Vakaria a

ITA No. 663/Del/2021 78 PSK Finance Solutions Pvt. Ltd. U.K. based businessman who is the owner of the investor company namely M/s Mesostrefia Ltd.  Sh. Saxena admitted in the statement recorded u/s 131 that out of the total consideration of Rs.6,25,97,924/- for sale of shares an amount of Rs.4,58,29,664/- was received by him in cash.  Sh. Saxena admitted in the statement recorded u/s 131 that he was looking after the operations of the assessee company and the premises owned by the assessee company was in his possession.  The case of Sh. Saxena was reopened u/s 148 for A.Y. 2013-14 and A.Y. 2014-15.  The revenue authorities, based on his statement, have assessed the long term capital gains including the cash found of Rs.4,58,29,664/- in the hands of Sh. Jai Shiv Saxena vide order dated 24.12.2018.  The Assessment Order in the case of the assessee was passed on 29.12.2017 assessing the same cash of Rs.4,58,29,664/-.  The cash found was owned and assessed in the hands of Sh. Jai Shiv Saxena and also in the hands of the assessee company.  Sh. Jain Shiv Saxena has also paid due taxes. Thus, the taxes on the cash found have been duly recovered by the revenue authorities.  The ld. CIT(A) has deleted the addition made in the hands of the assessee on the grounds that the said cash found has been accepted as additional income by Sh. Jai Shiv Saxena and the said amount has been duly assessed u/s 147 for A.Y. 2014-15 and also due taxes have already been

ITA No. 663/Del/2021 79 PSK Finance Solutions Pvt. Ltd. paid by Sh. Jai Shiv Saxena. Hence, assessing the same income in the hands of the assessee company again leads to double taxation of the same cash found and seized. Ergo, we hold that no infraction in the order of the ld. CIT(A) could be established and hence we decline to interfere with the reasoned order of the ld. CIT(A).

Sd/- Sd/- (Kul Bharat) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 15/05/2024 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR