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Facts
A search and seizure operation on RPS Infraprojects Group led to loose papers concerning M/s. Ekjyot Properties. The Assessing Officer (AO) added Rs. 2.93 crore under Section 69A for alleged on-money from flat sales and Rs. 43.15 lakh under Section 69C for alleged cash brokerage. The AO relied on these seized documents, but the assessee provided bank statements, sale agreements, and other documents arguing transactions were through banking channels or the loose papers were merely internal proposals without actual cash involvement.
Held
The CIT(A) deleted both additions, concluding that the seized loose papers were for management information or proposals and lacked corroborative evidence for cash transactions. The tribunal upheld the CIT(A)'s decision, noting the AO failed to conduct independent inquiries, prove actual cash transactions, or controvert the assessee's documented bank receipts. The tribunal found the 'balance of convenience' favored the assessee, justifying the deletion of the additions.
Key Issues
1. Whether the CIT(A) erred in deleting the addition of Rs. 2.93 crore under Section 69A for alleged on-money received from flat sales. 2. Whether the CIT(A) erred in deleting the addition of Rs. 43.15 lakh under Section 69C for alleged cash brokerage payments. 3. The evidentiary value and admissibility of seized loose papers, excel sheets, and WhatsApp chats in income tax proceedings when contradicted by bank records and assessee's explanations.
Sections Cited
Section 69A, Section 69C, Section 132, Section 132(1), Section 132(4), Section 132(4A), Section 153C, Section 153A, Section 43CA, Section 133(6), Section 194A, Section 292C
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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI AMARJIT SINGH & SHRI SANDEEP SINGH KARHAIL
O R D E R
PER AMARJIT SINGH, ACCOUNTANT MEMBER:
1. This appeal of the revenue for the assessment year 2019-20 is directed against the order dated 31.08.2023 passed by the ld. Pr. Commissioner of Income-tax (Central)-3 Mumbai. The revenue has raised the following grounds of appeal:
1) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,93,00,000/- made by the assessing officer u/s 69A as alleged on money received on sale of flats, without considering the facts and circumstances of the case that there was sufficient incriminating material in the form of loose papers, excel sheet entries and statements recorded during the search and post search proceeding to establish that the assessee has received cash over and above the value as per the sale deed?
2) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 43,15, 000/- made by the Ekjyot Properties A.Y. 2019-20 assessing officer u/s 69C of the I T Act on account of brokerage/commission paid in cash to the brokers on sale of flats, without considering the facts and circumstances of the case that there was sufficient incriminating material in the form of loose papers, excel sheet entries, whatsapp chats and statements recorded during the search and post search proceeding to establish that the assessee has paid brokerage/ commission in cash? 3) Whether on the facts and circumstances of the case and in law, the Ld. CITIA) has erred in deleting the addition made by the assessing officer u/s 69A of the Act on account of alleged on money received on sale of flats & u/s 69C of the IT Act on account of brokerage/commission paid in cash to the brokers on sale of flats, without considering his/her own findings in the same order whereby the contention of the assessee in challenging the authenticity and credibility of incriminating material in the form of loose papers, excel sheet entries, WhatsApp Chats and statements recorded during the search and post search proceeding were rejected by the Ld. CITA)? 4) The appellant craves to leave, to add, to amend and/ or to alter any of the ground of appeal if need be."
2. Fact in brief is that a search and seizure action u/s 132 of the Act was conducted in the case of ‘RPS Infraprojects and others’ Group on 15.11.2019 including search and seizure carried out in the case of Shri Tarun Vohra. During search and seizure action u/s 132 of the Act in the case of Shri Tarun Vohra certain loose papers were recovered and seized. On verification of the seized documents, information regarding financial transactions pertained to M/s. Ekjyot Properties was noticed. Thereafter, the case of the assessee was selected for scrutiny u/s 153C r.w.s. 153A of the Act and notice u/s 153C of the Act was issued on 21.04.2022. In response, the assessee has filed return of income on 03.06.2022 declaring total income at Rs. 52,50,270/-. The assessee firm was engaged in the business of development of residential units. The assessment u/s 153C of the Act was finalized on 30.03.2023 and total income was assessed at Rs. 3,88,65,270/- after making addition of Rs. 2,93,00,000/- u/s 69A of the Act on the ground that assessee had received on money on sale of flats and addition of Rs. 43,15,000/- u/s 69C of the Act was made on account of brokerage/commission paid to the brokers on sale of flats.
The assessing officer observed that assessee has separately maintained the noting of certain selected customers in a diary and loose papers. Therefore, the assessing officer opined that the assessee firm has accepted cash over and above the agreement value. The AO further stated that on verification of the excel sheet and loose papers found during the search and the submission filed by the assessee, it is found that during the year under consideration following payments were received in cash:
Sl. No Name of the party Amount received in cash (in Rs.) 1 Tina Agarwal 10,00,000 2 Narayan Chand Rajput 15,50,000 3 Smita U Parekh 25,00,000 Total 50,50,000
4. The assessing officer further stated that as per the loose sheet related to brokerage expenses, it was noticed that actual sale value of flats were higher than the value of sale agreement, therefore, the AO has calculated the on money as under:
1 2 3 4 5 6 7 8 9 Sl. No Agreement Brok % Brokerage Name Flat No Project Sales On data Amt. Name agreement money (2-8) 1 21400000 5% 1070000 Nrayan A-1201 Ekjyot 14400000 7000000 Rajput Sanman 2 20000000 5% 1000000 Sharvan A-1101 Ekjyot 13100000 6900000 Agarwal Sanman 3 21900000 5% 1095000 Sanjeev A-1001 Ekjyot 13100000 8800000 Agarwal Sanman 4 23000000 5% 1150000 Mr. A-801 Ekjyot 13100000 9900000 Patronis Sanman Total 86300000 4315000
5. The assessee in its reply in respect of amount received of Rs.10,00,000/- from Tina Agarwal, explained that Mrs Tina Agarwal and Shri Sharvan Agarwal have purchased flats for Rs. 1,31,00,000/- vide sale agreement dated 12.10.2018. In respect of allegations of the assessing officer of on money of Rs. 10,00,000/- as mentioned in the seized paper, the assessee explained that it had never received cash and that said Rs. 10,00,000/- in fact was received on 29.08.2016 through banking channel from Miss Tina Agarwal along with Mr. Sharvan Agarwal in current account with IDBI Bank towards part payment of consideration for purchase of Flat No. 1001 in their project “Ekjyot Sanman”. The assessee also explained that Tina Agarwal and Shri Sharvan Agarwal have purchased the said Flat No. 1001 on 12.10.2018 for a consideration of Rs. 1,31,00,000/- and the stamp duty value of that flat u/s 43CA was of Rs. 1,26,93,638/-. The assessee has also submitted the copy of sale agreement with them. However, the AO has not agreed with the submission of the assessee. He was of the view that as per the chart mentioned in the seized document, the brokerage was worked out on the consideration of Rs. 2,00,00,000/- as against Rs. 1,31,00,000/- mentioned in the sales agreement. However the assessing officer had not agreed with the submission of the assessee and was of the view that assessee firm has received cash of Rs. 69,00,000/- over and above the Ekjyot Properties A.Y. 2019-20 agreement value in the case of Tina Agarwal. After reducing an amount of Rs. 15,00,000/- was disallowed in the case of the assessee for A.Y. 2017-18, the remaining amount of Rs. 54,00,000/- was treated as unexplained money u/s 69A of the Act.
Similar allegation for Shri Narayan Chand Rajput the assessee explained that they have purchased the Flat No. 1201 for a consideration of Rs. 1,44,00,000/- and the stamp duty value of the said flat u/s 43CA was of Rs. 1,36,00,029/-. In respect of observation of the assessing officer of receiving an amount of Rs.15,5000/ in cash the assessee explained that in fact on 29.08.2016 and 07.09.2016 they have received the sum of Rs. 5,00,000/- and Rs. 10,50,000/- through banking channel from Naryan Chand Rajput in their current account with IDBI Bank Account towards part payment of purchase of said flat. The assessee has also furnished the relevant supporting document before the assessing officer.
However, the AO has not agreed with the submission of the assessee. The assessing officer stated that as per the chart mentioned in the seized document, the brokerage was worked out on the consideration of Rs. 2,14,00,000/- as against Rs. 1,44,00,000/- mentioned in the sales agreement which shows that assessee has collected more amount from the flat owner then the amount mentioned in the agreement. Therefore, the assessing officer has treated the amount of Rs. 65,00,000/- out of Rs. 70,00,000/- as unexplained money u/s 69 of the Act for the year under consideration after reducing Rs. 5,00,000/- which was already added to the total income of the assessee in A.Y. 2017-18.
Ekjyot Properties A.Y. 2019-20 In respect of allegation that Smita U Parekh has paid Rs. 25,00,000/-, reflected in loose papers the assessee explained that on 05.11.2018, Smita U Parekh along with Shri Upendra N Parikh has purchased the Flat No. 401 in their project. The copy of the sale agreement was also submitted. The assessee also submitted that sum of Rs. 25,00,000/- was received from Smita U parekh through banking channel in current account with IDBI Bank. However, the AO has not agreed with the submission of the assessee stating that assessee failed to give satisfactory explanation therefore, the amount of Rs. 25,00,000/- was considered as unexplained money u/s 69A of the Act.
Similarly, in the case of Chetan Mohanlal Barola Jain and Barkha Chetan Jain on the basis of rate of brokerage mentioned in the loose paper the assessing officer calculated Rs. 2,00,00,000/- as consideration for Flat No. 1001 as against agreement value of Rs. 1,50,00,000/- on 12.12.2018 and stated that assessee has accepted cash of Rs. 50,00,000/- over and above the agreement value.
Similarly, on the basis of brokerage given on the said loose paper the AO had computed consideration for sale of flat to Mr. Patronis of Flat No. 801 of Rs. 2,30,00,000/- as against Rs. 1,31,00,000/- as per agreement value. Therefore, the AO treated the amount of Rs. 99,00,000/- as unexplained money u/s 69 of the Act. The assessing officer has arrived at total on money on the basis of aforesaid working to the amount of Rs. 2,93,00,000/- as under:
Name On Money Ekjyot Properties A.Y. 2019-20 Tina Agarwal & Sharvan Agarwal 54,00,000 Narayan Chand Rajput and Manmati Narayann Rajput 65,00,000 Smita U Parekh 25,00,000 Chetan Mohanlal Barola Jain and Barkha Chetan Jain 50,00,000 Mr. Patronis 99,00,000 Total 2,93,00,000
Further, on the basis of loose papers seized from Tarun Vohra as discussed in this order, the assessing officer has also worked out brokerage on the sale value of the flats to various brokers/agents. As per the chart mentioned in the seized document, total brokerage of Rs. 43,15,000/- was worked out on the consideration against each flat. The detail of the same is given as under:
Sl No Agreement Brok% Brokerage Name Flat No. Project Data Amt. Name 1 21400000 5% 1070000 Narayan A-1201 Ekjyot Rajput Sanman 2 20000000 5% 1000000 Sharvan A-1101 Ekjyot Agarwal Sanman 3 21900000 5% 1095000 Sanjeev A-1001 Ekjyot Agarwal Sanman 4 23000000 5% 1150000 Mr. Patronis A-801 Ekjyot Sanman
The assessee was show caused why the brokerage of Rs. 43,15,000/- paid in cash should not be disallowed and added to its total income. The assessee explained that Shri Amit Wadhavani, the Real Estate Broker carrying on his brokerage business in the name of M/s. Sai Estate Consultant has approached them with a proposal that he has certain customers to whom he can convince to purchase their flats at a much higher value than the normal market price. For this proposal, he was Ekjyot Properties A.Y. 2019-20 expecting a brokerage by 5% on the sale value of the flat, however, the proposal given by Mr. Amit Wadhavani was never materialized and they have not paid any brokerage to him for sale of above flat. It is further explained that in fact neither Flat No. 1001 nor any other flat was sold to Mr. Sanjeev Agarwal as mentioned in the referred sheet. Similarly, neither Flat No. 801 nor any other flat was sold to Mr. Patronis as mentioned in page no. 39 of the loose paper. The assessee categorically stated that neither any brokerage of Rs. 43,15,000/- towards sale of flat as mentioned in page no. 39 of loose paper has been given nor the same has been accounted in the books of account. The AO has not agreed with the submission of the assessee. The AO has referred the FIR filed by Vicky Wadhavani that assessee has transferred one office and one shop to Mr. Wadhavani against the total amount which included amount due for commission/brokerage -. However, during the course of assessment, a notice u/s 133(6) of the Act has been issued to M/s. Sai Estate Consultant and in response to the same, M/s. Sai Estate Consultant stated that their company has neither accrued/received any commission income from M/s. Ekjyot Properties in F.Y. 2013-14 to F.Y. 2019-20 nor raised any invoice towards such commission to be received. However, the AO has not agreed with the submission of the assessee and stated that assessee failed to give satisfactory explanation to explain contents of excel sheet and loose paper regarding the brokerage paid in cash therefore amount of Rs. 43,15,000/- was considered as unexplained expenditure u/s 69C of the Act and added to the total income of the assessee.
Ekjyot Properties A.Y. 2019-20 8. Aggrieved assessee filed before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee. The relevant extract of the decision of ld. CIT(A) is reproduced as under:
“B.13. Decision: I have considered the facts of the case, findings of the AO as also the submissions of the appellant.
B.14. As regards the appellant’s contentions on admissibility of the evidence, whatsapp chat, no cash recovery, opportunity of natural justice, addition under appropriate section etc., the same have already been dealt with in AY 2017-18. Nevertheless, for the sake of easy reference, the same are reproduced. They shall also apply to the present year under consideration.
“4.9. I do not agree with the contentions of the appellant that evidences seized from the premises of third party do not have any evidentiary value or that they cannot be used for assessment proceedings. They can definitely be used to the extent they are corroborative in nature.
4.10. As regards the WhatsApp chats cited, the appellant has relied on the decision of the the Hon'ble Supreme Court dated 14.07.2021 in the case of A2Z Infraservices Ltd. Vs. Quippo Infrastructure Ltd. SLP(C) No. 8636/2021[1]. This decision has been rendered in the context of commercial dispute between two entities. They had entered into an agreement for waste management process. When there was a dispute, the appellant sought to rely on some of the WhatsApp messages to substantiate its claims. The respondent countered that the WhatsApp messages shown by the appellant are fabricated and forged. It was in this context that the Hon’ble Supreme Court held that “Messages exchanged on social media platform WhatsApp have no evidential value and that the author of such WhatsApp messages cannot be tied to them, especially in business partnerships governed by agreements.”
4.11. The provisions of Income Tax Act are completely different. In fact they enable the authorities to seize, place identification marks, make a note or an inventory, etc. In fact section 132(1) specifically provides that “(iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of subsection (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorized officer the necessary facility to inspect such books of account Ekjyot Properties A.Y. 2019-20 or other documents”. Besides S. 132(4) categorically states that they can be used in evidence in any proceeding under the Income Tax Act. Further, S. 132(4A) states that there is a presumption that such contents are true and they belong to such person. Apart from the above, S. 292C of the Act also categorically speaks of presumption as regards the material found in the possession or control of any person in the course of a search.
4.12. Thus, there are material differences vis-a-vis a commercial agreement where evidence has to be proved by the claimant unlike in a search action where the assessee has to rebut the presumption. There is no claim of the appellant that the WhatsApp Chats were not found in the phone or that such chats have been forged or fabricated. Hence, this contention of the appellant has no applicability to the facts of the case.
4.13. In the case of Hersh W Chadha vs DDIT, to 3098 & 3107/Del/2005, the Hon’ble ITAT held as follows: “The tax liability in the cases of suspicious transactions, is to be assessed on the basis of the material available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of incriminating information/ evidence available with AO." It was further held as “6.3 Rules of evidence do not govern the income-tax proceedings, as the proceedings under the Income-tax Act are not judicial proceedings in the sense in which the phrase "judicial proceedings" is ordinarily used. The Assessing Officer is not fettered or bound by technical rules about evidence contained in the Indian Evidence Act, and he is entitled to act on material which may not be accepted as evidence in a court of law.”
4.14. The Hon'ble Delhi High Court in Addl. CIT v. Jay Engg. Works Ltd. [1978] 113ITR 389 (Delhi) held that the Assessing Officer has, no doubt, to hear "evidence", but such evidence may consist of material which would be wholly inadmissible in a court of law.
4.15. In CIT v. Metal Products of India [1984] 150 ITR 714 (Punj. & Har.), it was held that the Assessing Officer may gather information in any manner he likes, behind the back of the assessee and utilize the same against the assessee, even if it does not, in all respects satisfy the requirements of the Indian Evidence Act. What is necessary is that he should have material upon which to base the assessment; "material" as distinguished from "evidence" which includes direct and circumstantial evidence.
4.16. The sum and substance of the above decisions is that unlike criminal proceedings where the charge has to be proved beyond doubt, Ekjyot Properties A.Y. 2019-20 income-tax proceedings are quasi-judicial. Tax liability in cases of suspicious transactions has to be assessed on the basis of the material available on record, surrounding circumstances, human conduct and preponderance of probabilities. Rules of evidence do not govern income tax proceedings and the AO is not fettered or bound by technical rules contained in the Indian Evidence Act and is entitled to act on material which may not be accepted as evidence in a court of law.
4.17. In the above background, the specific safeguards of presumptions laid down in the provisions of the Income Tax Act in favour of the department cannot be ignored. In every search and seizure action, the seizure is made in the presence of independent witnesses and a detailed panchnama including how the electronic evidences were handled / seized is given to the search person. The appellant had conveniently omitted to refer to them. Thus, I have no doubt in my mind that WhatsApp chats and other electronic evidences, loose papers etc seized during the search proceedings have ample evidentiary value to the extent they are corroborative in nature. The decisions relied upon by the appellant cannot be imported into the Income Tax proceedings mechanically, in view of the specific presumptions available in S. 132 and S. 292C. Such evidences cannot be rejected outright without examining the specific strength of such evidences. This part of the argument of the appeal stands rejected.
4.18. I am not able to accept this argument of the appellant to reject the evidentiary value of the whatsapp chats / electronic evidences / contents found therein etc. Nevertheless, in respect of the addition, the merit has been examined independently while deciding the appeal. Hence, the appellant should not have any grievance in this regard as each claim is examined based on its individual merit. Thus, in nutshell these arguments of the appellant are not agreed with and stand rejected.
4.19. As regards the argument that no cash was found and hence no addition could be made, I am unable to accept the same. Income-tax department does not conduct searches at all premises of the appellant but where they suspect that such evidences or other materials or valuables are kept. It is humanly impossible to search each and every person / premises linked to the assessee. Moreover, several assessees are in the habit of storing incriminating documents in secret premises including abroad /cloud server etc. Hence, absence of cash does not mean a clean chit to the appellant; it may only mean that he is not caught. It is well known that a robber (no offence meant; only for example) will not keep his stolen goods at the place of his usual Ekjyot Properties A.Y. 2019-20 residence. It is not even the claim of the appellant that all his premises were searched. Honoré de Balzac, the French novelist and playwright once remarked “Laws are spider webs through which the big flies pass and the little ones get caught”. A bigger assessee has enough avenues and resources to stash his fortune away from the hands of the law enforcer. Thus, absence of cash or valuable cannot be the determinant for culpability or innocence. Hence, this part of the argument is rejected.
4.20. Similarly, the appellant’s contentions that S.69A could not have been invoked has no merits. In the case of Manoj Aggarwal [2008] 113 ITD 377 (Delhi) (SB), the Hon’ble Special Bench of Delhi ITAT has held that wrong quoting of section is not fatal to the proceedings, and has preferred substance over form. Similarly, in 104 ITR 36, CIT vs Madurai Knitting Co, Hon’ble Madras HC held that quoting of wrong provision of law is immaterial. In the instant case, the AO has assumed valid jurisdiction to question and tax the appellant based on what he has deemed to be evidence against the appellant. Hence, this argument of the appellant is rejected.
4.21. Similarly, as regards ground no.2, the appellant has stated that adequate opportunity of being heard was not granted. Appellant has not demonstrated how it is so. From the perusal of the assessment order, it is evident that adequate opportunity was indeed granted. The hearings have been held over a staggered period of time, which is visible from the “dates of hearings”. The appellant indeed was aware as to what was happening. Thus, this argument of the appellant is also not accepted and is rejected.”
B.15. As regards the opportunity of hearing, it is seen that multiple opportunities have been given by the AO as mentioned in the assessment order (for the year under reference). No fault can be found with the action of the AO.
B.16. Coming to the merits of the case, the first issue is in respect of on- money for 5 flats aggregating to Rs. 2.93 Crores. According to the AO, the appellant is in receipt of on-money in respect of 5 flats aggregating Rs.2,93,00,000/-. According to the appellant, the sheet referred to by the AO is not cash dealing for sale of flats but an exercise undertaken with a view to find out the cash flow for payments.
B.17.1. As regards on-money receipt of Rs.54 lakhs from Tina Agarwal and Sharvan Agarwal, a similar issue came up in AY 2017-18 where the same was discussed as follows: “4.22.2. As regards Rs. 15,00,000/- Ekjyot Properties A.Y. 2019-20 from Sh. Sharvan Agarwal, it is seen that the said flat is sold to Sharvan Agarwal and Tina Agarwal. The appellant has also produced ledger with Sh. Sharvan Agarwal from 01.04.2015 to 31.03.2020. The transactions in this ledger start from 29.08.2016. It is the claim of the appellant that the AO has mistaken the unsecured loans received through banking channels as cash receipts. Fom the ledger it is seen that the appellant has accounted for interest payment and deducted TDS thereon. The Form No. 16A dt. 14.06.2017 issued by the appellant in favour of Sh. Sharvan Agarwal shows deduction and deposit of TDS of Rs. 25,808/- u/s 194A. Section 194A deals with TDS on interest other than interest on securities. The AO has stated in para 6.5.1. that out of the cash receipts of Rs. 15,00,000/- Rs. 10,00,000/- received on 29.08 from Mrs. Tina Agarwal is not appearing in the ledger and hence, it is reflective of undisclosed transaction. From the ledger of Sh. Sharvan Agarwal it is seen that Rs. 10,00,000/- received on 29.08.2016 and Rs. 10,00,000/- on 02.09.2016 are shown.”. Since the AO had estimated total cash receipts at Rs.69 lakhs and considering that Rs.15 lakhs was taxed in AY 2017-18, he brought Rs.54 lakhs to tax this year. As the decision has already been taken for AY 2017-18 for receipt of on-money, same shall apply for this year as well.
B.17.2. As regards on-money receipt of Rs.65 lakhs from Manmati Chand, a similar issue came up in AY 2017-18 where the same was discussed as follows: “As regards Rs. 5,00,000/- from Smt. Manmati Chand (Flat No. A-1201), it is the claim of the appellant that Rs. 5,00,000/- was received through banking channel only.”. Since the AO had estimated total cash receipts at Rs.70 lakhs and considering that Rs.5 lakhs was taxed in AY 2017-18, he brought Rs.65 lakhs to tax this year. As the decision has already been taken for AY 2017-18 for receipt of on-money, same shall apply for this year as well.
B.17.3. As regards on-money receipt of Rs.25 lakhs from Smitha Upendra Parikh, it is the finding of the AO that cheque payment of Rs.25 lakhs was received on 01.09 and unaccounted cash payment of Rs.25 lakhs was also received on the same date. According to the appellant, only Rs.25 lakhs was received through banking channel on 01.09. The appellant’s alternative plea is that (if at all), it was a receipt of AY 2017- 18.
B.17.4. As regards on-money receipt of Rs.50 lakhs from Chetan Mohanlal Barola Jain and Barkha Chetan Jain, the said flat 1101 was reflected in the seized paper as sold to Shravan Agarwal for Rs.2.00 B.17.5. As regards on-money receipt of Rs.99 lakhs from Mr Patronis, it is the contention of the appellant that the flat no.801 is actually sold to Manish Laxmilal Jain & Dipika Manish Jain for Rs.1.80 crores and not to Mr. Patronis. It was also pointed out that unsecured loans had been taken from Mr Patronis for which interest was paid @15% p.a.
B.18. It is seen from the assessment order in para 6.1. that the AO has referred to the statement of Sh. Dheeraj Pradeep Vohra, recorded on 09.11.2019. He has referred to Ques. No. 20 as regards loose paper content and Ques. No. 11 as regards acceptance of cash payment for sale consideration of flat. In fact the Ques. No. 11 reproduced by the AO actually pertains to statement of Sh. Tarun Pradeep Vohra and not that of Sh. Dheeraj Pradeep Vohra. He has stated in qn.no.11 that “the payment is made through banking and some cash may also be accepted”; yet he has clarified the same in reply to qn.25 that he was referring to initial bookings of Rs.11,000/- to Rs.15,000/-.I have also perused the statement of the statement of Sh. Dheeraj Vohra recorded on 09.11.2019 wherein he is seen to have repeatedly denied having dealt in cash. Same is the case with the statement of Sh. Tarun Pradeep Vohra recorded on 06.11.2019 and 10.11.2019. Seen in this factual background, the appellant’s claim does seem plausible.
B.19. In the case of ACIT vs Grasim Industries Ltd in for AY 1992-93 dated 17.11.2006, (https://indiankanoon.org/doc/874242/), the Hon’ble ITAT held as follows: “The task of the Tribunal would, therefore, be to analyse the materials relied on by both the sides and evaluate the relative merits and reliability. It is sometimes in the nature of a comparative exercise to measure the degree of reliability between the materials relied on by the revenue and the materials relied on by the assessee. This degree of reliability seems to be the crucial test in the present case in applying the principles of preponderance of probability. We think that this is the way to proceed to find a balance of convenience on which alone it might be possible for us to come to a fair decision.”. Eventually, the Hon’ble Tribunal held that balance of convenience was apparently tilting in favour of the assessee and ruled as such.
B.20. Applying the above ratio, given the set of facts before me, I am of the view that balance of convenience lies in favour of the appellant. There Ekjyot Properties A.Y. 2019-20 are enough doubts posed by the appellant in the findings of the AO because of which the additions deserve to be deleted. Accordingly, the additions made by the AO u/s.69A of Rs.2,93,00,000/- stands deleted.
B.21. Now, the next addition of Rs.43.15 lakhs made by the AO u/s.69C is taken up. The finding of the AO is that 5% brokerage has been paid in cash for 4 properties. I have perused the statement of Shri Deeraj Vohra recorded on 09.11.2019 wherein he has stated that he is not actively involved in the financial transactions and has repeatedly denied having dealt in cash.
B.22. As regards FIR filed by Shri Vicky Bhagwan Wadhwani, the appellant has pointed out that during the course of assessment proceedings for AY 2019-20, a detailed reply has been given to the AO vide appellant’s letter dated 27.03.2023. The appellant has given a detailed sequence of events of pending litigation with Shri. Amit Bhagwan Wadhwani & his group (Shri Amit Bhagwan Wadhwani and Shri Vicky Bhagwan Bhagwani are directors of Sai Estate Consultants Chembur P Ltd). The appellant has brought out details of litigation under Negotiable Instruments Act for the dishonoured cheques given by Wadhwani for purchase of flat, recovery suits before Hon’ble Bombay HC etc. It is also noted that M/s. Sai Estate Consultants has denied in response to notice u/s.133(6) that they have accrued / received any commission income. The appellant has also stated that sales of flats has been cancelled after due notice in public domain. The appellant has contended that the actual commission paid was @0.75% on Sale Value of the Flat to broker Mr. Ramesh Soni who marketed “Ek Jyot Sanman” project. The appellant also contended that 5% commission is much on the higher side and vindicates its stand that the document relied upon was merely a proposal to sell at higher prices. It is also pointed out by the appellant that Flat No. 801 (one of the property for which brokerage was taxed) was not sold to Mr Patronis. This flat was eventually sold vide agreement dated 10.05.2022 (much after search) to Mr. Manish Laxmilal Jain & Mrs.Dipika Manish Jain for a consideration of Rs.1,80,00,000/- Consequently, I am of the view that balance of convenience lies in favour of the appellant on this addition as well. There are enough doubts posed by the appellant in the findings of the AO because of which the additions deserve to be deleted. Accordingly, the additions made by the AO u/s.69C of Rs.43,15,000/- stands deleted.”
Ekjyot Properties A.Y. 2019-20 9. Before us, the ld. Counsel filed paper book comprising copies of documents and details filed before the lower authorities comprising copies of sale agreement, ledger account, bank statement and replies submitted by the assessee before the assessing officer etc. The ld. Counsel submitted that it was explained that the working referred in the loose paper was prepared for management information purpose and the assessing officer arrived at erroneous conclusion that amount was received in cash and brokerage amount was given in cash. The ld. Counsel further submitted that even during the course of assessment proceedings, the assessee has requested the AO to summon the parties mentioned in the loose paper u/s 131 of the Act to verify the receipt of cash from the parties however the AO has not carried out such exercise to controvert the claim of the assessee. The ld. Counsel contended that the amount was in fact received through normal banking channel and properly reflected in the books of account of the assess. The ld. Counsel further submitted that assessee has neither paid any brokerage towards sale of flat to the amount of Rs. 43,15,000/- calculated by the assessing officer nor the same have been accounted in the books of account of the assessee. The ld. Counsel has also placed reliance on various judicial pronouncement as referred in the paper book filed before us.
On the other hand, ld. DR supported the order of assessing officer Ekjyot Properties A.Y. 2019-20 11. Heard both the sides and perused the material on record. The assessing officer computed the on money of Rs.2,93,00,000/- on sale of flat computed on basis of brokerage payment rate mentioned in the loose paper as discussed supra in this order. A part of said loose paper, the assessing officer has not brought any relevant material on record to substantiate that assessee has actually received on money as worked out by the assessing officer. Even the assessing officer has failed to controvert the submission of the assessee supported with relevant document as discussed in this order that the said receipt of Rs. 10,00,000/- from Tina Agarwal, Rs. 15,50,000/- from Narayan Chand Rajput and Rs. 25,00,000/- from Smita U Parekh were in fact actually received by the assessee through banking channel in its current accounts maintained with IDBI Bank as against the observation of the assessing officer that the same was received in cash. The assessee has also furnished the actual copy of sale agreement and corresponding stamp duty value of the flat showing that assessee has sold all the flats more than the stamp duty value. We have also considered the relevant submission of the assessee which is reproduced as under:
“B.12. Appellant’s submissions: The appellant’s submissions have been reproduced in toto while discussing AY 2017-18 (part of this combined order). Hence, the factual aspects, legal averments and other repeated arguments are not reproduced (although considered while deciding the dispute). Select excerpts of submission are reproduced below: “…..
Ekjyot Properties A.Y. 2019-20 10. From the loose Paper No. 39,40 & 41 the Assessing Officer came to a conclusion that Your Appellant received a sum of Rs.50,00,000/- in the Assessment Year 2017-18 as cash consideration over & above the agreement value of the Flats & accordingly, the addition of Rs.50,00,000/- was made U/s 69A of the Act for the Assessment Year 2017-18. An Appeal is filed against impugned Assessment Order before Your Honor.
Based on the loose Paper No. 39,40 & 41 the Assessing Officer came to a conclusion that Your Appellant received a sum of Rs.2,93,00,000/- in the Assessment Year 2019-20, the year under consideration, over & above the agreement value of the Flats & accordingly, the addition of Rs.2,93,00,000/- was made U/s 69A of the Act for the Assessment Year 2019-20 which is being agitated before Your Honor in this Appeal.
Thus, the additions made by the Assessing Officer U/s 69A of the Act are spread over in two Assessment Years i.e Assessment Year 2017-18 & Assessment Year 2019-20. Since, the additions for the Assessment Year 2017-18 are agitated separately, Your Appellant is not describing those facts in this current Appeal.
13. The contents of the Show Cause Notice as well as reply in that connection are being discussed hereunder at appropriate places. …… 14.2.4. Facts regarding Loose Paper No. 39: · The Project of Your Appellant “Ek Jyot Sanman” was marketed by a broker Mr. Ramesh Soni to whom Your Appellant has paid brokerage @0.75% on Sale Value of the Flat, upon entering into the Agreement with the buyer. · Mr. Amit Wadhwani, the Real Estate Broker carrying on his brokerage business in the name of “M/s Sai Estate Consultant”, approached Your Appellant with a proposal that he has certain customers to whom he can convince to purchase flats constructed by Your Appellant at a much higher value than the normal market price. For this proposal he was expecting a Brokerage of 5% on the Sale Value of the Flats. · When Mr. Amit Wadhwani (the broker) visited office of Your Appellant with the Proposal, he dropped a Chart showing the probable Sale Value & the probable brokerage payable to him. Page No.39 is the nothing but the said chart of probable sale value & probable brokerage amounts Facts regarding Loose Paper No. 40 & 41 (based on which addition of Rs.50,00,000/- made in the Assessment Year 2017-18 ) · The impugned statement contained in Page Nos.40 & 41 was prepared for management information purpose. · Mr. Dheeraj Pradeep Vohra was trying to reconcile the Bank Balance as on 15.09.2016 with amounts received from customers during the period from the last week of August, 2016 to 15.09.2016.
· This exercise was undertaken with a view to find out cash flow for the payments to be made for various purposes. · The amounts & the names reflected in the statement against particular dates coincides with the amounts reflected in the bank statements already filed with the Assessing Officer. …….
14.3.2. Spectrum of Your Appellant : a. It was absolutely incorrect on the part of the Assessing Officer to observe that Your Appellant failed to explain the entries contained in Page No.39, 40 & 41. In fact, each item of alleged cash receipts was explained in detail along with the supporting evidence. Your Appellant would like to draw Your Honor’s attention to Point No. 4 & 5 of Your Appellant’s Letter Bearing Reference No. 2023/IT-Assess/ dated 28.03.2023 filed in response to Show Cause Notice, a copy of which is already enclosed hereinabove in Annexure No.06. Moreover, in the Assessment Order itself the Assessing Officer has reproduced the reply filed by Your Appellant, which he has simply brushed aside without any cogent reason. b. As regards Assessing officer’s observation in Point 14.3.1(b) & 14.3.1(c) above Your Appellant would like to state that during the course of Assessing proceedings, the following explanations were offered: · The Project of Your Appellant “Ek Jyot Sanman” was marketed by a broker Mr. Ramesh Soni to whom Your Appellant has paid brokerage @0.75% on Sale Value of the Flat, upon entering into the Agreement with the buyer. · Ekjyot Properties A.Y. 2019-20 Mr. Amit Wadhwani, the Real Estate Broker carrying on his brokerage business in the name of “M/s Sai Estate Consultant”, approached Your Appellant with a proposal that he has certain customers to whom he can convince to purchase flats constructed by Your Appellant at a much higher value than the normal market price. For this proposal he was expecting a Brokerage of 5% on the Sale Value of the Flats. · When Mr. Amit Wadhwani (the broker) visited office of Your Appellant with the Proposal, he has dropped a Chart showing the probable Sale Value & the probable brokerage payable to him. Page No.39 is the nothing but the said chart of probable sale value & probable brokerage amounts payable to Mr. Amit Wadhwani when the deal about sale of flats by him are materialized. c. As regards Assessing officer’s observation in Point 14.3.1(d) above Your Appellant would like to state that during the course of Assessing proceedings, the following explanations were offered: · The impugned statement contained in Page Nos.40 & 41 was prepared for management information purpose. · Mr. Dheeraj Pradeep Vohra was trying to reconcile the Bank Balance as on 15.09.2016 with amounts received from customers during the period from the last week of August, 2016 to 15.09.2016. · This exercise was undertaken with a view to find out cash flow for the payments to be made for various purposes. · These Loose Papers do not have any title nor do they in any way suggest that there were cash dealings between the parties. · The amounts & the names reflected in the statement against particular dates coincide with the amounts reflected in the bank statements already filed with the Assessing Officer. d. As regards Assessing officer’s observation in Point 14.3.1(e) above, it is very surprising to note that the Assessing Officer has cast the onus upon Your Appellant to establish that Your Appellant did not receive any money in cash. The plethora of Judgment discussed hereinbelow in para 11.5, it has been unequivocally held that it is the onus of the revenue to prove the fact that the Assessee was in receipt of Cash Consideration. It is also pertinent to note that during the course of Search no Cash, Any Money, Bullion, Jewellery or Other Valuable Articles were found. ….. d. Your Appellant’s rebuttal · It was categorically established that Your Appellant has sold Flat No.1001 to Mrs. Tina Agarwal & Mr. Shravan Agarwal & not Flat No. 1101 as mentioned in Loose Paper No. 39 on which the learned Assessing Officer has placed his reliance. Your Appellant has also explained in fact, the said Flat No. 1001 was sold for a consideration of Rs.1,31,00,000/- to the said parties & entire consideration for purchase of said flat was paid by Mrs. Tina Agarwal. · In the Assessment Year 2017-18, it was categorically established that the sum of Rs.15,00,000/- was received from Mr. Shravan Agarwal through Banking Channels & that too towards unsecured loans. Proper Interest @15% p.a was paid on this loan & proper TDS U/s 194A was deducted. · Unfortunately, while making the addition on the ground that Your Appellant has allegedly received cash from Mrs. Tina Agarwal & Mr. Shravan Agarwal, the Assessing officer conveniently ignored the basic principles of Law of Evidence. For making addition U/s 69A of the Act it was his onus to prove that Your Appellant did receive cash of Rs.69,00,000/- (Rs.15,00,000/- + Rs.54,00,000/- ) from them. · The Assessing Officer did not make any enquiry with Mrs. Tina Agarwal & Mr. Shravan Agarwal to the fact that whether they paid any cash to Your Appellant during the Financial Year 2016-17 & 2018-19. · The Assessing Officer simply shifted the Onus to Your Appellant to prove that Your Appellant did not receive any cash from Mrs. Tina Agarwal & Mr. Shrava1 Agarwal. · Your Appellant specifically requested Assessing Officer to issue summons to all the parties from whom the Appellant allegedly received cash during the Financial Year 2016-17 & 2018-19. · Unfortunately, the Assessing Officer while making this addition, did not make any enquiry & did not bring any cogent & corroborative evidence on record to prove the fact that Your Appellant has received cash of Rs.54,00,000/- from Mrs. Tina Agarwal & Mr. Shravan Agarwal. · 14.3.3.2. As regards addition of alleged cash receipt of Rs.65,00,000/- from Mr.Narayan Chand Rajput & Manmati Narayan Rajput d. Your Appellant’s rebuttal During the course of Assessment Proceedings Your Appellant has submitted that they have sold Flat No.1201 on 05.11.2018 to Mr. Narayan Chand Rajput & Mrs. Manmati Chand Rajput for a Consideration of Rs.1,44,00,000/- in their Project “Ek Jyot Sanman”. To prove this fact, they have submitted following documents before the learned Assessing Officer.
Copy of Sale Agreement
Copy of Ledger Account
3. Copy of Bank Statement highlighting the receipts · Unfortunately, while making the addition on the ground that Your Appellant has allegedly received cash from Mrs.Manmati Chand Rajput & Mr. Narayan Chand Rajput, the Assessing officer conveniently ignored the basic principles of Law of Evidence. For making addition U/s 69A of the Act it was his onus to prove that Your Appellant did receive cash of Rs.70,00,000/- (Rs.5,00,000/- + Rs.65,00,000/- ) from them. · The Assessing Officer did not make any enquiry with Mrs.Manmati Chand Rajput & Mr. Narayan Chand Rajput to the fact that whether they The Assessing Officer simply shifted the Onus to Your Appellant to prove that Your Appellant did not receive any cash from Mrs.Manmati Chand Rajput & Mr. Narayan Chand Rajput · Your Appellant specifically requested Assessing Officer to issue summons to all the parties from whom the Appellant allegedly received cash during the Financial Year 2016-17 & 2018-19. · Unfortunately, the Assessing Officer while making this addition, did not make any enquiry & did not bring any cogent & corroborative evidence on record to prove the fact that Your Appellant has received cash of Rs.65,00,000/- from Mrs.Manmati Chand Rajput & Mr. Narayan Chand Rajput. · Now, Your Appellant is enclosing herewith following documents submitted before Assessing Officer in the Course of Assessment Proceedings:
…… 14.3.3.3. As regards addition of alleged cash receipt of Rs.25,00,000/- from Smita U Parekh c. Your Appellant’s rebuttal · During the course of Assessment Proceedings Your Appellant has submitted that they have sold Flat No.401 on 05.11.2018 to Mrs. Smita U Parikh & Mr. Upendra Nagindas Parikh for a Consideration of Ekjyot Properties A.Y. 2019-20 Rs.1,40,00,000/- in their Project “Ek Jyot Sanman”. To prove this fact, they have submitted following documents before the learned Assessing Officer.
Copy of Sale Agreement
Copy of Ledger Account
6. Copy of Bank Statement highlighting the receipts · It was categorically established that the sum of Rs.25,00,000/- was received from Mrs. Smita U Parikh through Banking Channels & that too towards Purchase of Flat No.401 in Your Appellant Project. · Unfortunately, while making the addition on the ground that Your Appellant has allegedly received cash from Mrs. Smita U Parikh, the Assessing officer conveniently ignored the basic principles of Law of Evidence. For making addition U/s 69A of the Act it was his onus to prove that Your Appellant did receive cash of Rs.25,00,000/- from Mrs. Smita U Parikh. · The Assessing Officer did not make any enquiry with Mrs. Smita U Parikh as to the fact that whether she has paid any cash to Your Appellant during the Financial Year 2018-19. · The Assessing Officer simply shifted the Onus to Your Appellant to prove that Your Appellant did not receive any cash from Mrs.Smita U Parikh. · Your Appellant specifically requested Assessing Officer to issue summons to all the parties from whom the Appellant allegedly received cash during the Financial Year 2018-19. · Unfortunately, the Assessing Officer while making this addition, did not make any enquiry & did not bring any cogent & corroborative evidence on record to prove the fact that Your Appellant has received cash of Rs.25,00,000/- from Mrs.Smita U Parikh. · Now, Your Appellant is enclosing herewith following documents submitted before Assessing Officer in the Course of Assessment Proceedings: d. From Page No.41, Your Honor would observe that the sum of Rs.25,00,000/- was received from Smita U Parikh on 01.09.2016. Accordingly, if the addition was at all required to be made on the ground of alleged cash receipts, it should have been made in the Assessment Year 2017-18 & not in the Assessment Year 2019-20. …… 14.3.3.4 As regards addition of alleged cash receipt of Rs.50,00,000/- from Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain c. Your Appellant’s rebuttal · While making addition of Rs.50,00,000/- being alleged On Money Receipt the learned Assessing Officer simply placed reliance on Page No. 39 of Loose Paper. If Your Honor go through Page No. 39 of Loose Paper Your Honor would observe the fact that on Page No. 39 it was reflected that Flat No.1101 was sold for a consideration of Rs.2,00,00,000/- to Mr.Sharvan Agarwal. In fact, the said Flat No. 1101 was sold to Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain for a Sale Consideration of Rs.1,50,00,000/-.
Sale consideration reflected against Flat No. 1101 on Page No.39 & arrived at conclusion that Your Appellant has received On Money of Rs.50,00,000/- from them. When, Page No 39 of loose Paper does not contained any information which suggest that Your Appellant did receive Unfortunately, while making the addition on the ground that Your Appellant has allegedly received cash from Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain, the Assessing officer conveniently ignored the basic principles of Law of Evidence. For making addition U/s 69A of the Act it was his onus to prove that Your Appellant did receive cash of Rs.50,00,000/- from them. · The Assessing Officer did not make any enquiry with Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain to the fact that whether they paid any cash to Your Appellant during the Financial Year 2018-19. · The Assessing Officer simply shifted the Onus to Your Appellant to prove that Your Appellant did not receive any cash from Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain. · Your Appellant specifically requested Assessing Officer to issue summons to all the parties from whom the Appellant allegedly received cash during the Financial Year 2018-19. · Unfortunately, the Assessing Officer while making this addition, did not make any enquiry & did not bring any cogent & corroborative evidence on record to prove the fact that Your Appellant has received cash of Rs.50,00,000/- from Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain. · Now, Your Appellant is enclosing herewith following documents submitted before Assessing Officer in the Course of Assessment Proceedings: c. Your Appellant’s rebuttal · During the course of Assessment Proceedings Your Appellant has submitted that the sum of Rs.37,00,000/- taken from M/s Patronis was towards Unsecured Loan in the Financial Year 2016-17 on which Your Appellant has paid Interest @15% p.a & TDS has also been deducted on Interest payment. · It was categorically stated that Your Appellant has not sold any Flat including Flat No. 801 to M/s Patronis & therefore question of adding the sum of Rs.99,00,000/- in the hands of Your Appellant by placing reliance on Page No.39,40 & 41 of the loose paper does not arise. · Vide Letter bearing reference No. 2023/IT-Assess/057 dated 02.02.2023, Your Appellant has submitted details of Flats sold by them. · Unit No. 801 was sold vide Agreement Dated 10.05.2022 to Mr. Manish Laxmilal Jain & Mrs.Dipika Manish Jain for a consideration of Rs.1,80,00,000/- copy of Index -2 enclosed herewith in Annexure No.18. · It was categorically established that Your Appellant has not sold any flat to M/s Patronis in fact Your Appellant has taken Unsecured Loan from M/s Patronis & during the course of Assessment Proceedings Your Appellant has submitted copy of Ledger Confirmations. · Unfortunately, while making the addition on the ground that Your Appellant has allegedly received cash from M/s Patronis, the Assessing officer conveniently ignored the basic principles of Law of Evidence. For making addition U/s 69A of the Act it was his onus to prove that Your Appellant did receive cash of Rs.99,00,000/- from M/s Patronis. · The Assessing Officer did not make any enquiry with M/s. Patronis as to the fact that whether they have paid any cash to Your Appellant during the Financial Year 2018-19. · The Assessing Officer simply shifted the Onus to Your Appellant to prove that Your Appellant did not receive any cash from M/s Patronis. · Your Appellant specifically requested Assessing Officer to issue summons to all the parties from whom the Appellant allegedly received cash during the Financial Year 2018-19. · Ekjyot Properties A.Y. 2019-20 Unfortunately, the Assessing Officer while making this addition, did not make any enquiry & did not bring any cogent & corroborative evidence on record to prove the fact that Your Appellant has received cash of Rs.99,00,000/- from M/s. Patronis. · Now, Your Appellant is enclosing herewith following documents submitted before Assessing Officer in the Course of Assessment Proceedings:
….. 15.1. Ground No.3 15.2. Summarized Facts as regards this Ground · There was a search conducted in case of “M/s RPS Infra Project & others group”, during Search and Seizure action u/s 132 of the Act in the case of Shri.Tarun Vohra certain loose papers were found from Your Appellant’s Office at Mumbai. One of the Loose Paper namely Page No. 39 consist of probable brokerage working payable to one of the brokers namely Mr.Amit Wadhwan who came to Your Appellant with the proposal of selling flats in the project “Ek Jyot Sanman” of Your Appellant at certain predetermined consideration. · The Project of Your Appellant “Ek Jyot Sanman” was marketed by a broker Mr. Ramesh Soni to whom Your Appellant has paid brokerage @0.75% on Sale Value of the Flat, upon entering into the Agreement with the buyer. · Mr. Amit Wadhwan, the Real Estate Broker carrying on his brokerage business in the name of “M/s Sai Estate Consultant”, approached Your Appellant with a proposal that he has certain customers to whom he can convince to purchase flats constructed by Your Appellant at a much higher value than the normal market price. For this proposal he was expecting a Brokerage of 5% on the Sale Value of the Flats. · When Mr. Amit Wadhwan (the broker) visited office of Your Appellant with the Proposal, he has prepared a Chart showing the probable Sale Value & the probable brokerage payable to him. Page No.39 is the nothing but Ekjyot Properties A.Y. 2019-20 the said chart of probable sale value & probable brokerage amounts payable to Mr. Amit Wadhwan when the deal about sale of flats by him are materialised · The loose Paper 39 found during the search proceedings is just probable working & nothing can be concluded therefrom is clear from the fact, neither Flat No 1001 nor any other flat was sold to Mr. Sanjeev Agarwal as mentioned in above sheet. In the similar way neither Flat No. 801 or any other flat was sold to M/s Patronis, this itself suggest that the said Page No. 39 of loose paper on which the Learned Assessing Officer wants to place reliance was only dumb document with no evidentiary value & cannot be relied upon. Since, the transaction on which we are allegedly supposed to be paid the brokerage did not materialize the question of paying brokerage on them does not arise. · In Para 7.5 of the Assessment Order the Assessing Officer has specifically stated that a notice u/s.133(6) of the Act has been issued to M/s Sai Estate Consultant and in response to the same, M/s Sai Estate Consultants have stated that they have neither accrued/received any commission income from Your Appellant in F.Y.2013-14 to F.Y.2019-20 nor they have raised any invoices towards such commission on Your Appellant. · Your Appellant once again state that, they have neither paid any brokerage of Rs.43,15,000/- towards sale of flats as mentioned in Page No 39 of loose paper nor the same have been accounted for in the books of accounts & therefore, question of disallowing the same & treating the same as Undisclosed expenditure U/s 69C in hands of Your Appellant does not arise. ……
12. Regarding reference of FIR given by the assessing officer, the Ld.CIT(A) had mentioned the detailed submission given by the assessee as reproduced at para 15.4.2 at page 90 to 101 of the order of ld. CIT(A) and also stated the nature of dispute between assessee and M/s. Sai Estate Consultant relating to amount due to the assessee on selling of shops/flats in the project named Ekjyot Sukriti and cheques issued by them to the assesse were dishonored therefore assessee filed a criminal complaint u/s 138 Ekjyot Properties A.Y. 2019-20 of the Negotiable Instrument Act. The assessee had also filed recovery suits on 9th June 2022 and 30th august 2022 before the Hon’ble Bombay High Court. The assessee also sumitted in the aforesaid submission mentioned in the order of the Ld.(CIA)that in retaliation said party had filed counter complaint against the assessee.
13. The proceedings u/s 153C of the Act was initiated in the case of the assessee firms on the basis of three loose paper no. 39 to 41 found and seized from this search action in the care of RPS Group and Shri Tarun Vohra one of the partner of the assessee firm. The AO has taken the loose paper 39 as the basis for computing most of the additions. In respect of loose paper no. 39, the assessee explained that Shri Amit Wadhwani the Real Estate Broker made proposal for selling flats at a higher price and expected a brokerage of 5% on the sale value of the flats, however, the same could not be materialized as the same was merely a proposal. In respect of other loose paper, the assessee submitted that the same were prepared for management purpose to reconcile the bank balance on 15.09.2016 with a view to find out the cash flow for the payment to be made for various purposes. It was also submitted that these papers do not reflect any cash payment. The AO had made addition of Rs. 2.93 crore for making payment in cash for purchasing flats by Tina Agarwal, Sharvan Agarwal Flat No. 1101 of Rs. 54 lakh, Shri Narayan Chand Rajput and Manmati Narayan Rajput Rs. 65 lakh for Flat No. A-1201, Shri Patronis for Flat No. A-801 of Rs. 90 lakh. He also made addition of cash payment in respect of Smita U Parekh of Rs. 25 lakh and Rs. 50 lakh in Ekjyot Properties A.Y. 2019-20 respect of Chetan Mohanlal Barola Jain and Barkha Chetan Jain. The merits of these additions have been discussed in the findings of the ld. CIT(A) as elaborated supra in this order.
In the case of Sharvan Agarwal and Tina Agarwal the assessee explained that it had never received cash and that said Rs. 10,00,000/- in fact was received on 29.08.2016 through banking channel from Miss Tina Agarwal along with Mr. Sharvan Agarwal in current account with IDBI Bank towards part payment of consideration for purchase of Flat No. 1001 in their project “Ekjyot Sanman”. The assessee also explained that Tina Agarwal and Shri Sharvan Agarwal have purchased the said Flat No. 1001 and not Flat No.1101 on 12.10.2018 for a consideration of Rs. 1,31,00,000/- and the stamp duty value of that flat u/s 43CA was of Rs. 1,26,93,638/-.
In case of Mr. Narayan Chand & Mrs. Manmati Chand Rajput the assessee explained that in fact on 29.08.2016 and 07.09.2016 they have received the sum of Rs. 5,00,000/- and Rs. 10,50,000/- through banking channel from Naryan Chand Rajput in their current account with IDBI Bank Account towards part payment of purchase of said flat. The assessee has also furnished copy of sale agreement, copy of ledger of the party and copy of bank statement in support of its claim that page no. 39 was merely a proposal as discussed.
On the basis of brokerage given on the said loose paper the AO had computed consideration for sale of flat to Mr. Patronis of Flat No. 801 of Rs. 2,30,00,000/- as against Rs. 1,31,00,000/- as Ekjyot Properties A.Y. 2019-20 per agreement value and treated the amount of Rs. 99,00,000/- as unexplained money u/s 69 of the Act. But actually the assessee had not sold any flat to the said persons and no material on record was brought to demonstrate that flat was sold to Mr. Patronis. The AO has not brought any material on record to controvert these material facts.
In respect of Smit U Parekh, as per the supporting material i.e. copy of agreement, ledger account, bank statement the assessee had sold flat no. 401 for Rs. 1.40 crore. The amount Rs. 25 lakh in fact received through banking channel in the current account of the assessee maintained with IDBI Bank.
Similarly, in the case of Chetan Mohanlal Barola Jain and Barkha Chetan Jain merely on the basis of rate of brokerage mentioned in the loose paper the AO concluded that assessee had sold flat no. 1101 for Rs. 2 crore as against actual sale consideration of Rs. 1.50 crore reflected in the registered sale agreement.
Even the said broker M/s. Sai Estate Consultant in response to notice u/s 133(6) submitted that they had neither received any commission nor raised any invoice. The assessing officer had neither carried out any enquiry/verification from the parties mentioned in the loose paper and nor brought any material on record to disprove the submission of the assessee.
The AO had made addition of Rs. 43,15,000/- u/s 69C on the basis of loose paper no. 39 without disproving the submission of the assessee that same was merely proposal and further during Ekjyot Properties A.Y. 2019-20 the course of assessment proceedings the AO had made enquiry from M/s. Sai Estate Consultant u/s 133(6) of the Act and in response the said broker submitted that they had neither received any commission income nor raised any invoices towards the alleged commission. After considering the facts and material as discussed we do not find any reason to interfere in the decision of ld. CIT(A). Therefore, grounds no.1 to 3 of the appeal filed by the revenue are dismissed. Accordingly, the appeal of the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 27.09.2024.