SH. VIKAS KAPOOR,,DELHI vs. ACIT, NEW DELHI

3. Aggrieved with the aforesaid order assessee filed the appeal before the Ld. CIT(A), who vide his impugned order dated 27.9.2016 has dismissed the appeal of the assessee.

4. Against the order dated 27.9.2016, assessee is in appeal before the Tribunal.

5. At the time of hearing, Ld. Counsel of the assessee has filed a Paper Book containing pages 1 to 226 having the copy of cash book as Annexure -29 supplied by the Department; copy of ITR filed by the assessee for the assessment year 2007-08 alongwith the Challan; Computation of income for the AY 2007-08; income and expenditure a/c and balance sheet for the year ending 31.3.2007; copy of assessment order passed for the assessment year 2007-08 on 2.6.2014 wherein the impugned additions were made of Rs. 4,44,000/- on the basis of seized material contained in Annexure A-29 relating to M/s Bright Professional Pvt. Ltd; copy of written submissions filed before the CIT(A) in respect of the additions made of Rs. 4,44,000/- in the declared income of the appellant for the assessment year 2007-08; copy of appellate order passed for the assessment year 2007-08 by the CIT(A)-23, New Delhi wherein the additions made were deleted and appeal of the appellant was allowed on the identical facts; copy of reasons recorded relating to the assessment year 2008-09 on the identical facts as recorded in the assessment year 2007-08 prior to invoke the provision contained u/s.147 of the I.T. Act; copy of objections filed with regard to the initiation of proceedings vide letter dated 20.7.2015 before the AO relating to AY 2008-09; Adjudication of objection filed by the AO vide letter dated 6.8.2015; copy of remand report sent by the AO to the Ld. CIT(A)-23,New Delhi for the assessment year 2008-09; copy of letter dated 1.9.2016 sent to the appellant by the CIT(A)-23, New Delhi seeking certain clarification; copy of letter dated 31.12.2013 sent by the CIT, Delhi (Central-I), New Delhi to Income Tax Settlement Commission, thereby furnishing Rule 9 report in the case of M/sBright Professional P Ltd; copy of ITR filed by the assessee for the assessment year 2008-09; copy of computation of income, income and expenditure a/c, balance sheet filed by the assessee forming part of his ITR for the assessment year 2008-09; copy of the statement recorded by Syed Rashid Masood on 8.1.2016 one of the Director of M/s Bright Professional Pvt. Ltd., in the case of Sh.

Vikas Kapoor; copy of statement recorded by Sh. Sanjeev Kumar Gupta on 8.1.2016 one of the Director of M/sBright Professional Pvt. Ltd., in the case of Sh. Vikas Kapoor; Copy of examination of proceedings u/s. 131 of the Income Tax Act, 1961, of sh. Syed Rashid Masood and Sh. Sanjeev Kumar Gupta in the case of Sh.

Vikas Kapoor and Copy of statement recorded u/s. 132(4) of the Income Tax Act on 25.11.2010 of Sh. Rashid Masood one of the Director of M/s Bright Professional Pvt. Ltd. Ld. Counsel of the assessee also filed the Brief Synopsis which read as under:-

“That the appellant filed his ITR on a net income of Rs. 1,57,962/- on 31.07.2008, the same was accepted as correct. Thereafter, a search was conducted on M/s Bright Group of Cases on 25.11.2010.

On the basis of rough documents seized and marked as Annexure- A29 by the Investigation Wing of the Deptt. It was found that M/s Bright Professionals Pvt. Ltd. have also paid cash to the appellant being one of the faculty member during the F.Y. 2007-08 (A.Y.

2008-09) of Rs. 20,70,000/-.

That on the basis of report forwarded by the Investigation Wing of the Deptt. about the payment of cash to the appellant of Rs. 20,70,000/-, the Assessing Officer recorded reasons uls 147 of the I.T. Act, and thereafter the notice was issued uls 148 to the appellant. Thereafter, the reasons recorded were objected vide letter dated 20.07.2015. Whereby the appellant seek the copy of Performa on which the JCIT has accorded permission to re-open the assessment uls 151 of the I.T. Act, which was not supplied. Alongwith the said objections, the appellant has also filed his Affidavit wherein he categorically states, that during the F.Y. 2007-08 (A.Y. 2008-09), he has received only Rs. 91,000/- as cash from MIs Bright Professionals Pvt. Ltd. as his professional charges against the professional assignment given to him and besides this, no any other amount he has received from them, as alleged.

That it was also apprised to the concerned Assessing Officer, that likewise to this year, there was also an information available with him relating to the Financial Year 2006-07, that the appellant has received over and above from his professional charges of Rs. 4,44,000/- from M/s Bright Professionals Pvt. Ltd., which he has failed to disclosed in his books of accounts for the said year, as such on the basis of identical reasons recorded in the preceding year i.e. A.Y. 2007-08, the additions were made in the hands of the appellant of Rs. 4,44,000/- in the declared income, against which the appellant preferred an appeal before the CIT(A)-23, New Delhi, and the same has been allowed by the CIT(A)-23, thereby deleting the additions made of Rs. 4,44,000/- in the income declared, but the Assessing Officer disposed off the objection filed out-rightly without taking into consideration the aforementioned facts.

That during the course of assessment proceedings, the concerned Assessing Officer was further apprised the following information I documents, available with him: i. That the addition made on the identical reasons recorded in the preceding year i.e. AY. 2007•08 have already been deleted by the Ld. CIT(A)-23 after taking into consideration all the facts explained, documents produced, filed and placed upon records. ii. That since the addition made in the preceding year have already been considered and deleted as such by the Ld. CIT(A), therefore, no further additions if any be required to be made in the hands of the appellant in the AY. 2008-09 in terms of Rule of Consistency required to be followed on the identical issue, as has been held by the various Courts even by the Apex Court. iii. That the Assessing Officer was further apprised about the Statement of Sh. Rashid Masood, one of the Director of MIs Bright Professionals Pvt Ltd. recorded on 25.11.2010 uls 132(4) of the Income Tax Act 1961. Wherein he explained the names of their faculty members in which the name of the appellant is not appearing. It further appears in the said Statement in response to the Questions No. 14,15,16,17,19,20,21,22,23,24 & 25, put to him, that against the receipts of fees from students and payment to any of their faculty members, they are not issuing I getting any receipts and the same were also not being recorded in their regular books of accounts. This apart, the director failed to explain the cash in hand available with them of Rs. 1.49 Crore in his Statement recorded on 25.11.2010. He has further admitted that they are not maintaining any proper books of accounts on the basis of such fee receipts from students and further payment to any of their faculty members. He also failed about the details of the collection of fee of Rs. 3.17 Crores during the year and also about the payment of Rs. 17.41 Lakhs appearing in their Financial Statement taken from their business premises. He further could not substantiate the nature and extent of the receipts and its payment thereof to their faculty members and also failed to furnish any of the documentary evidence with regard to the expenditure incurred for the purpose of running their said Institute. iv. That during the course of assessment proceedings, the statement of Sh. Syed Rashid Masood, one of the director was also recorded uls 131 of the Income Tax Act 1961, on 08.01.2016.

During the course of his Statement the director admitted: c. That they have made cash payment to the appellant of Rs. 13,63,080/- during the AY, 2008-09 and not Rs. 20,70,0001- which were taken to be the concealed income by the Assessing Officer at the time of recording the reasons. b. He has further admitted that the said payments claimed to be made of Rs. 13,63,080/- appears in their rough day-book maintained by us. He further admitted that we are not having any records about the fee receipts from students and consequently professional charges paid to our faculty members.

The same facts were confirmed by the other director Sh. Sanjeev Kumar Gupta of MIs Bright Professionals Pvt. Ltd. in his statement recorded on 08.01.2016 uls 131 of the Act c. That in their cross-examination on 08.01.2016, both the directors have admitted that there is no any agreement entered and executed between any of the faculty member and the management of their Institute. All the fee receipts and payments are verbal and there is no record either maintained or available with us for the sharing of fee between the faculty members. They all are being paid in cash for which we are not maintaining any proper records with us.

No TOS is deducted, no regular books of accounts were maintained reflecting therein the said receipts / payments thereof.

That the Assessing Officer without taking into consideration all the information furnished, documents produced and available with him, make the further addition of Rs. 13,63,080/- in the hands of the appellant while finalizing the assessment proceedings.

That the appellant being aggrieved filed an appeal before the Ld. CIT(A), who has upheld the additions made by the Assessing Officer on the ground that since the unaccounted receipts and expenses have been taken into consideration by the ITSC u/s 245C(1) of the Act, for the Assessment Year 2004-05 to 2010-11 in the case of M/s Bright Professionals Pvt. Ltd., therefore, opined while passing the appellate order that since the results declared in the Rule-9 report filed by the Deptt. and adjudicated u/s 2450(4) of the Act, by the ITSC, therefore, no interference if any is required while adjudicating the appeal of the appellant filed for the Assessment Year 2008-09.

That now the following question of law is arises, which needs adjudication by this Hon'ble Tribunal:

1. Whether the Assessing Officer was correct under the law to make additions of Rs. 13,63,080/- in the hands of the appellant on the basis of unsigned, uncorroborated and dumped documents found from the premises of M/s Bright Professionals Pvt. Ltd. during the course of search.

2. Whether the Assessing Officer was correct under the law to make additions of Rs. 13,63,080/- in the hands of the appellant, though the directors denied of having any proper records about the receipts and payments, and other records for any of their expenditure incurred, though on the other hand the appellant has filed his Affidavit, categorically decline to have the receipt of Rs. 1363080/- as his professional fee during the A.Y. 2008-09, which has not been taken into consideration either by the Assessing Officer or by the Ld. CIT(A).

3. Whether the Assessing Officer was correct under the law to make additions of Rs. 13,63,080/- in the hands of the appellant on the identical grounds / facts, as in the preceding year i.e. A.Y. 2007- 08, which has already been deleted by the Ld. CIT(A)-23 and the Assessing Officer has failed to follow the Rule of Consistency while finalizing the assessment proceedings for the A.Y. 2008-09.

4. Whether the Assessing Officer was correct under the law to make additions of Rs. 13,63,080/- in the hands of the appellant without appreciating that the provisions of law has been invoked u/s 147 of the Income Tax Act 1961, only on the basis of borrowed information from the Investigation Wing of the Deptt. without having his own satisfaction thereof, prior to record reasons and consequently issuing notice u/s 148 of the Income Tax Act 1961, to the appellant.

5. Whether the Assessing Officer was correct under the law to make additions of Rs. 13,63,080/- in the hands of the appellant because of not taken into consideration / adjudicating the Affidavit filed by the appellant, that apart from the receipt of Rs. 91,000/- he has not received further any amount in cash of Rs. 13,63,080/-.

6. Whether the Assessing Officer was correct under the law to make additions of Rs. 13,63,080/- in the hands of the appellant, as he has failed to appreciate that the appellant is maintaining his proper books of accounts and same have also been accepted as true and correct, while finalizing the assessment proceedings and no adverse finding if any has been given with regard to the maintenance of proper books of accounts by the appellant for the Assessment Year 2008-09.

As such, the order passed is required to be quashed or alternatively the additions made of Rs. 1363080/- in the income of the appellant is deserves to be deleted and may please be deleted accordingly. All the documents relied upon by us have already been provided and placed upon records in our Paper-Book containing from Page No.1 to Page No. 226.

That in support of our contention, we are relying upon the following judgments:-

Details of Judgments relied upon on Borrowed Information:

It has been held in the following cases, that the provision invoked by the Assessing Officer without having of his own satisfaction on the material received / possessed, the provision contained U/S 147 cannot be invoked on the borrowed information from the Investigation Wing of the Deptt.

1. Pr. Commissioner of Income Tax Vs. G.&G. Pharma India Ltd. reported as ITA 545/2015, pronounced on 08.10.2015 by the Hon'ble ITAT, New Delhi

2. ACIT Vs. Dhariya Construction Co. (2010) 328ITR 515 S.C.

3. CITv. India Terminal Connector System-Ltd. ITA No. 6430f2011.

4. Phool Chand Bajrang Lal V. Income-tax Officer (1993) 203 ITR 456 SC:

5. CIT V. Pradeep Kumar Gupta (2008) 303 ITR 95;

6. Krown Agro Foods Pvt. Ltd. V. ACIT, in WP. (C) No. 5330 of 2014

7. Chhugamal Rajpal V. SP Chaliha (1971) 79ITR 603, Supreme Court

8. ACIT Vs. Sh. Devesh Kumar reported as wherein it was held:

9. CIT Vs. Kamdhenu Steels & Alloys u« & Ors., SLP No. 15640/2012. (SC).

10. CIT Vs. Kamdhenu Steels & Alloys Ltd. & Ors., (2012) 248 CTR (Del) 33., (DHC)

11. CITvs. SFIL Stock Broking Ltd.,(2010) 325ITR 285., (DHC).

12. Sarthak Securities Co. Pvt. Ltd. Vs. ITo.,(2010) 329ITR 110., (DHC).

13. Signature Hotels Pvt. Ltd. Vs. ITO & Anr., (2011) 338ITR 51., (DHC).

14. Recent decision of Hon 'ble Jurisdictional High Court of Delhi in the case of CITvs. Insecticides (India) Ltd. 2013 357 ITR 330 (Del).

15. Decision of ITAT Delhi Bench in the case of ITO vs. On Exim Pvt. Ltd. (2013) 157 TTJ 633 (ITAT Delhi).

16. CIT Vs. Sun Engineering Work Pvt. Ltd. (Supra)

17. Vipin Khanna Vs. CIT and Amrinder Singh Dhiman Vs. ITO (Supra).

18. Travancore Cement Ltd. Vs. ACIT (Supra)

REPORTED AS (2002) 258ITR 317 (DEL), wherein it was held:

Income-tax Officer, (1975) 101 ITR 385 (AP),

34.ITO, Ward-31(2) Vs. Amar Khosla, New Delhi in for the A.Y 2001-02

40. Sheo Narain Jaiswal & Ors. Vs.ITO, 176ITR 35 (Pat.)

41. Anirudh Sinhji Karan Sinhji Jadeja Vs. State ofGujarat, (1995)

5 SCC 302

43. Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District 1, Calcutta & Anr., (1961) 41 ITR 191 (SC)

45. In P. C Gulati, Voluntary Liquidator, Panipat Electric Supply Co. Ltd. v. CIT, Delhi, (1972) 86ITR 501 (DEL),

46. Harish Chandra & Ors. v. CIT, (1985) 154 ITR 478 (DEL)

Topandas Kundanmal v. CIT, (1978) 114 ITR 237 (GUJ) were also quoted with approval.

47: CIT, West Bengal II v. Hindustan Housing & Land Development Trust Limited, (1986) 161 ITR 524 (SC).

48. New Friends Co-operative House Building Society Ltd. v. CIT & Anr., (2010) 327 ITR 39 (P&H)

49.ITO, Calcutta & Ors. v. Lakhmani Mewal Das, (1972) 103 ITR 437 (SC)

Details of judgments relied upon on Mechanical Approval uls 151 of the Income Tax Act, 1961: Pro CIT-6 Vs. M/s NC Cables Ltd. in Hon'ble Delhi High Court, New Delhi vide order dated 11.01.2017 held as under Section 151 of the Act clearly stipulates that the CIT (A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed."

That in the case of ITO, Ward-31 (2) Vs. Amar Khosla New Delhi in for the A.Y 2001-02 by the ITAT, 'H' Bench, New Delhi vide order dated 26.12.2013, the similar observation was drawn by the Court.

Other Cases decided / relied upon on the identical issue:

1. Central India electric Supply Co. Ltd. Vs.ITO, 333ITR 237 (Del).

2. United Electric Co. Pvt. Ltd. Vs. CIT and others, 258ITR 317

3. CIT Vs. SPL's Sidhartha Ltd. 345ITR 223 (Del)

4. CIT Vs. Naveen Khanna (dated 18.11.2009 in (DHC).

5. State of Bihar Vs. JA.C Saldanna & Ors. AIR (1980) SC 326.

6. State ofGujarat Vs. Shantilal Mangaldas, AIR (1969) SCN 634.

7. Anirudh Sinhji Karan Sinhji Jadeja Vs. State ofGujarat, (1995)

5 SCC 302

8. Central India Electrical Supply Co. Ltd. Vs. ITO & Anr., Reported as (2011) 333 ITR 237 (del)

9. Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies

District 1, Calcutta & Anr., (1961) 41 ITR 191 (SC) .

10. CIT v. Shri Tirath Ram Ahuja (HUF), (2008) 306 ITR 173 (DEL)

11. In P.C Gulati, Voluntary Liquidator, Panipat Electric Supply Co.

Ltd. v. CIT, Delhi, (1972) 86ITR 501 (DEL)

12. Harish Chandra & Ors. v. CIT, (1985) 154 ITR 478 (DEL)

Trust Limited, (1986) 161 ITR 524 (SC)

Anr., (2010) 327 ITR 39 (P&H)

437 (SC)

17. Chanchal Kumar Chatterjee v. Income Tax Officer, "B" Ward,

Central Salaries Circle, Calcutta & Ors., (1972) 93 ITR 130

(CAL) .

18. Govinda Choudhury & Sons v. Income Tax Officer, Ward A,

Berhampur & Ors., (1975) 109 ITR 370 (OR)

Details of Judgments relied upon on Rule of Consistency:

That in the under noted cases, it has been held, that the rule of consistency has to be followed in the subsequent years on the basis of any finding / conclusion drawn on the identical facts in the preceding years:

1. CIT Vs. Neo Polypack (P) Ltd. 245ITR 492 (Del)

2. Birumal Gaurishankar Jain & Co. Vs. Settlement Commission 195 ITR 792 (SB) Supreme Court of India.

3. Radhasoami Satsang Vs. CIT 193 ITR 321 (SC)

Details of Judgments relied upon on Un-corroborated / dumped documents having possessed by the Deptt.

That it has been held in the under noted cases, without having any corroborating evidence / material, any of the figures mentioned / appearing on the unsigned loose papers seized / collected by the Deptt., during the course of search/survey, having no evidentially value under the provisions of law even U/S 292C of the I.T. Act.

2. M/s Delco India Pvt. Ltd. reported as dated 10.2.2016 by the Hon'ble Delhi High Court.

3. Samta Khinda Vs. ACIT, Central Circle-22, reported as and 55151D120J3 A.Y 2009-10 date of order 29.11.2016

4. P. Koteshwara Rao order dated 12.8.2016 0/ the ITAT, Visakhapatnam (ITA No. 251 & 252Vizag12012 (Ayrs. 2007-08 & 2008-09)

5. K V Lakshmi Savitri Devi vs. ACIT (2012) 148 TTJ 157, ITAT Hyderabad Benches.

7. CBIvs. VC Shukla (1998) 3 SCC 410)

8. CIT vs. PV Kalyansundaram (294 ITR 49)

9. CIT vs. Girish Chaudhary (2008) 296 ITR 619 (Delhi) - Delhi High

Court.

6. On the contrary, Ld. DR relied upon the orders of the authorities below and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference, hence, he requested that the appeal filed by the Assessee may be dismissed.

During the course of examination of seized material contained in Annexure A-29 & A-30, AO noted that huge payments have been made to various persons in cash. Most of the individuals are Faculty Members who took teaching assignments for students enrolled by M/sBright Professional Pvt. Ltd.. Sh. Vikas Kapoor, the assessee is one of the Faculty Members associated with M/sBright Group. AO further observed that M/ Bright Professionals Pvt. Ltd. have also paid cash to the assessee being one of the faculty member during the F.Y. 2007-08 (A.Y. 2008-09) of Rs. 20,70,000/-. On the basis of report forwarded by the Investigation Wing of the Deptt. about the payment of cash to the appellant Of Rs. 20,70,000/- the Assessing Officer recorded reasons u/s 147 of the I.T. Act and thereafter the notice was issued u/s. 148 of the I.T. Act and reasons recorded were objected vide letter dated 20.7.2015 and AO rejecting the same, completed the assessment at Rs. 15,21,040/- u/s. 143(3) r.w.s.

147 of the I.T. Act, 1961 vide his order dated 11.2.2016 and made the addition of Rs. 13,63,080/- on account of undisclosed income and completed the assessment, which Ld. CIT(A) in Appeal has affirmed. We further find that AO was very much aware that likewise to this year i.e. 2008-09, there was also an information available with him relating to the Financial Year 2006-07 i.e. AY 2007-08, that the assessee has received over and above from his professional charges of Rs. 4,44,000/- from M/s Bright Professionals Pvt. Ltd., which he has failed to disclosed in his books of accounts for the said year, as such on the basis of identical reasons recorded in the preceding year i.e. AY. 2007-08, the additions were made in the hands of the assessee of Rs.4,44,000/- in the declared income, against which the assessee preferred an appeal before the CIT(A)- 23, New Delhi, and the same has been allowed by the CIT{A)-23, thereby deleting the additions made of Rs. 4,44,000/- in the income declared, but the Assessing Officer disposed off the objection filed out-rightly without taking into consideration the aforementioned facts.

7.1 We further note that during the course of assessment proceedings the concerned Assessing Officer was further apprised by the Assessee the following information / documents, available with him: i. That the addition made on the i.e. A.Y. 2007-08 have already been deleted by the Ld. CIT(A) consideration all the facts explained, documents produced, filed and placed upon records. ii. That since the addition made in the preceding year have already been considered and deleted as such by the Ld. CIT(A), therefore, no further additions if any be required to be made in the hands of the assessee in the A.Y. 2008-09 in terms of Rule of Consistency required to be followed on the identical issue, as has been held by the various Courts even by the Apex Court. iii. That the Assessing Officer was further apprised about the Statement of Sh. Rashid Masood, one of the Director of M/s Bright Professionals Pvt. Ltd. recorded on 25.11.2010 u/s 132(4) of the Income Tax Act 1961. Wherein he explained the names of their faculty members in which the name of the appellant is not appearing. It further appears in the said Statement in response to the Questions No. 14,15,16,17,19,20,21,22,23,24 & 25, put to him, that against the receipts of fees from students and payment to any of their faculty members, they are not issuing/ getting any receipts and the same were also not being recorded in their regular books of accounts. This apart, the Director failed to explain the cash in hand available with them of Rs. 1.49 Crore in his Statement recorded on 25.11.2010. He has further admitted that they are not maintaining any proper books of accounts on the basis of such fee receipts from students and further payment to any of their faculty members. He also failed about the details of the collection of fee of Rs. 3.17 Crores during the year and also about the payment of Rs. 17.41 Lakhs appearing in their Financial Statement taken from their business premises. He further could not substantiate the nature and extent of the receipts and its payment thereof to their faculty members and also failed to furnish any of the documentary evidence with regard to the expenditure incurred for the purpose of running their said Institute. iv. That during the course of assessment proceedings, the statement of Sh. Syed Rashid Masood, one of the Director was also recorded u/s 131 of the Income Tax Act 1961, on 08.01.2016.

During the course of his Statement the Director admitted: a. That they have made cash payment to the appellant of Rs. 13,63,080/- during the A.Y. 2008-09 and not Rs. 20,70,000/- which were taken to be the concealed income by the Assessing Officer at the time of recording the reasons. b. He has further admitted that the said payments claimed to be made of Rs. 13,63,080/- appears in their rough day-book maintained by us. He further admitted that we are not having any records about the fee receipts from students and consequently professional charges paid to our faculty members. The same facts were confirmed by the other Director Sh. Sanjeev Kumar Gupta of M/s Bright Professionals Pvt. Ltd. in his statement recorded on 08.01.2016 uls 131 of the Act. c. That in their cross-examination on 08.01.2016, both the directors have admitted that there is no any agreement entered and executed between any of the faculty member and the management of their Institute. All the fee receipts and payments are verbal and there is no record either maintained or available with us for the sharing of fee between the faculty members. They all are being paid in cash for which we are not maintaining any proper records with us. No TDS is deducted, no regular books of accounts were maintained reflecting therein the said receipts / payments thereof.

7.2 We further note that the Assessing Officer without taking into consideration all the information furnished, documents produced and available with him, make the addition of Rs. 13,63,080/- in the hands of the assessee while finalizing the assessment proceedings, without appreciating the facts, that on the basis of dump, uncorroborated and unsigned documents, without having any nexus to the payment of Rs. 13,63,080/- alleged to be paid to the assessee, the addition made only on the basis of presumption and guesswork of the Assessing Officer was not tenable, even the Directors of the company could also further not been able to prove the authenticity and validity of the document wherein reflecting the amount if any be paid to the appellant of Rs. 13,63,080/- during the Financial Year 2007-08 in their Statements recorded u/s 132 and 131 of the Income Tax Act 1961 and in their cross-examination also, therefore, the additions made are not liable to the sustained. My view is fully supported by the decision of the ITAT, Delhi in the case of Samta Khinda vs. ACIT, Central Circle-22 passed in ITA Nos.

336/Del/2012 & 5515/Del/2013 (AY 2009-10 dated 2911.2016, wherein it has been held that without any corroborating evidence /material, any of the figures mentioned /appearing on the unsigned loose papers seized / collected by the Department during the course of search /survey, having no evidentially value under the provisions of law even u/s. 292C of the I.T. Act, 1961. In the aforesaid case the Tribunal has held as under:-

“8. We have heard both the parties and perused the records, especially the Orders of the revenue authorities and the case laws cited by the Ld. Counsel of the assessee. In this case search u/s. 132 of the Act was conducted at the premises of the assessee at 2, Golden Gate, Westend Greens,

Rajokari, New Delhi- 110 038 on 6.11.1008. During the course of search a computer printout page 5 of Annexure I was found and seized from the residential premises of the assessee. The seized paper has been shown is a part of the assessment order. On perusal of the same the AO held that RS. 96 lacs has been given by Samta Singh to Sudhiksha

Singh in cash which has not been recorded in the books of the assessee. the AO has made an addition of Rs. 96 lacs in the hands of the assessee on the basis of the document seized from the premises of the assessee. We find that the seized document does not have any signature of the assessee. However, it is a computer print which has not been used / maintained / operated by the assessee. On perusing the said seized document, it is clear that certain nothings have been made which cannot be said to be the actual transaction. This is only an unsigned /undated loose paper with the Department to substantiate its stand. No cheque transaction has taken place between the Sudhiksha Singh and the Assessee during the financial year 2008-09. The addition has been made merely on the basis of this loose paper without any corroborating evidence and on conjecture and surmises. Therefore, the presumption u/s. 292C of the Act is a rebuttable presumption. The presumption as envisaged in section 292C is limited to the correctness of the documents found at the time of search or survey, but that presumption has not been extended by the statute to be presumed to be the income of the assessee. In view of the aforesaid discussions, we find considerable cogency in the assessee’s counsel submissions that the issue in dispute is squarely covered by the following decisions:-

8.1 In the case of Vatika Landbase Pvt. Ltd. – 383 IT 320

(ITA No. 670/2014 dated 26.2.2016)- Delhi High Court has adjudicated as under:-

In the present appeal, the Revenue urged the following questions:

"1. Whether on the facts a d circumstances of the case, the Income Tax Appellate Tribunal was correct in Law in deleting the addition of Rs.

25,40,36,454 out of the total addition of Rs.

31,01,09,834 made by the AO on account of undisclosed receipt (from sale of space flats in Vatika Triangle?

2. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in law in deleting of Rs. 11.49,55,096 (i.e.

Rs. 11,34,05,096 plus Rs. 15.50,000) out of the total addition of Rs. 13,84,20.000 made by the AD on account of undisclosed income not declared by the Assessee in its books of account?

3. Whether on the (acts and circumstances of the case, the Income Tax Appellate Tribunal was correct in law in deleting the addition of Rs.

1,04,39,000 made by the AO on account of accommodation entries taken by the Assessee?

4. Whether on the facts and circumstances of the case, the order of the ITAT is not perverse as it

has failed to consider that in this case, the AO made the addition on the basis of the relevant searched material gathered from the Assessee during the course of the search proceedings?" 29. However, by an order dated 20th May 2015 the only question that was framed for consideration by the ITAT was as under: "Did the ITAT fall into error in holding that the addition of Rs. 5,60,73,380 was unsustainable in law in the circumstances 0 the case?"

30. Consequently, as the present appeal by the Revenue was concerned, its scope is confined to the question framed viz., the sustain ability of the deletion by the ITAT of the additions made by the AO as sustained by the CIT(A) of Rs.

5,60,73,380/- pertaining to the sale of flats on the second and third floor of VT.

recovered from the file in the computer of Mr.

Awasthi, forms the basis of the addition made by the AO, which was further reduced by the CIT (A).

This was in the form of a computer print out of three sheets which were unsigned and undated.

The first sheet was titled 'Cash- in-flow detail for the revenue', the next was titled 'Revenue details' and the third was titled 'Vatika Triangle,

Guargaon.' The notes to the documents are indicative of their being projections. Noting (i) states that "it is presumed that the building will be completed and fully let out in the month of November 2002." Another note states "Further, the sale of the building will took place over a period of nine months." Admittedly, as on the date of the search the construction was still in progress. Flats up to the fourth floor had been sold. The view taken by the ITAT that mere fact that the print out states that the flats on second and third floor have been sold, does not necessarily mean that they were sold at the rates indicated therein is definitely a plausible view to take.

from the computer of Mr. Sunil Awasthi, he ought to have been summoned to explain the rates of sale shown therein for the flats on different floors.

In fact, the Assessee did make a request for his cross-examination. The other possibility was to examine the purchasers of the flats as they would have confirmed the price paid by them and how much of it was in cheque and what extent in cash.

However, that too was not done.

……..

3 and 4 of the said document.

……

Tax v. S.M Aggarwal (supra) the said document can at best be termed as a 'dumb' document which in the absence o{independent corroboration could not possibly have been relied upon as a substantive piece of evidence to determine the actual rates at which the flats were sold. Further as pointed out in Commissioner of Income Tax v. D.K. Gupta (supra) merely because there are notings of figures on slips of paper, it did not mean that those transactions actually took place. Likewise in Commissioner of Income Girish

Chaudhary (supra), the Court termed a loose sheet containing some notings of figures as a 'dumb document' since there was no material to show as to on what basis the AO had reached a conclusion that the figure '48' occurring in one of them was to be read as Rs. 48 lakhs.

to draw an inference on the basis of the projection in the document, particularly when the Assessee offered a plausible explanation for the document. The burden shifted to the Revenue to show, on the basis of some reliable and tangible material, how rate at which the flats on the second and third floors of VT was higher than that dictated in the sales register or the sale deeds themselves.

that the ITAT was justified in coming to the conclusion that the addition of Rs. 5,60,73,380 made by the CIT (A) was not sustainable in law.

framed by the Court is answered in the negative, i.e., in favour of the Assessee and against the Revenue.

8.2 In the case of M/s Delco India Pvt. Ltd. (ITA No.

116/2016) dated 10.2.2016 – Delhi High Court has held as under:-

Section 292C of the Act, inter alia, provides that where any books of accounts or other documents are found in possession or control of any person in the course of search under Section 132 or survey under Section 133A of the Act, it may be presumed that such books or documents belong to such person. Undisputedly, such presumption is rebuttable. It is not disputed that the Assessee had clearly denied having any dealing with M/s

Smridhi Sponge Limited and had also filed an affidavit to that effect. The ITAT found, as a matter of fact, that the Assessee on its part had made the necessary enquiries and also provided final accounts of M/s Smridhi Sponge Limited; confirmation from the Director of M/s Smridhi

Sponge Limited; details of the bank accounts; final accounts; Director" s Report; PAN Number etc. which sufficiently discharged the burden cast on the Assessee. The ITAT also found that the Assessee had provided the necessary information for the AO to make the requisite enquiries from M/s Smridhi Limited as well as M/s Galax Ex orts

Pvt. Ltd. In our view no interference with the order of the ITAT is called for under Section 260A of the Act since the findings of the ITAT are essentially factual. Further, we find no infirmity with the findings returned by the ITAT and in any event the same cannot be held to be perverse by any stretch.

8.3 In the case of P. Koteshwara Rao order dated 12.8.2016 of the ITAT, Visakhapatnam (ITA No. 251 & 252Vizag/2012 (Ayrs. 2007-08 & 2008-09), the ITAT has observed as under:- 11. The only issue that came up for our consideration is whether on facts and circumstances of the case, the seized documents indicate exchange of on money between the parties. Admittedly, in the assessee's case there was no search. The seized document found during the course of search in the premises of M/s.

M.V.V. Builders, is a loose sheet wherein certain financial transactions were recorded in the name of the assessee. Though, Sri M.V.V.

Satyanarayana stated that he had paid a sum ofRs.50 lakhs and Rs.25 lakhs in the financial year relevant to assessment year 2007-08 & 2008-09, to Sri P. Koteswara Rao towards land dispute settlement, nowhere it is stated that he had paid on money to the assessee towards purchase of site. The assessee right from the beginning stated that he had not received any on money from M/s.

M.V.V. Builders towards sale of site. Besides, loose sheets found in the premises of M/s. M.V.V.

Builders, the A.O. does not have any other document to show that the assessee has received on money from the purchaser. The A.O. has not made out any attempt to find out some reliable cogent material evidence on record to support his findings or to corroborate the statement of the purchaser. The assessee denied having received any on money over and above what was stated in the sale deed. The assessee rightly claimed that the sale transaction has been completed on 7.6.2006. The sale transaction has been completed by way of registered sale agreement- cum-GPA. The assessee has received full consideration as on the date of registration of document and handed over the possession of the property to the buyers. The allegation of the A.O. is that the purchaser has paid on money to the assessee in the financial years relevant to assessment year 2007-08 and 2008-09 which is almost one year after sale is completed. We further noticed that total consideration has been paid through proper banking channel. It was not a case of A.O. that the value shown in the sale deed is not real value of the property, because the value declared in the sale deed is the market value of the property, fixed by the state government authorities for determining stamp duty purpose. Further, there is no evidence with the A.O. to show that there is a under valuation of property and provisions of section SOC of the Act is invoked while completing the assessment. The A.O. merely acted upon the statement given by the third party which was totally denied by the assessee. It is a settled position of law that unless statement is tested under cross examination, the same cannot be considered as evidence against the assessee. The A.O. used the admission of partners of purchaser firm made u/s 13 (4) of the Act in their case against the assessee, but failed to note that admission of other parties cannot be considered as conclusive evidence against the assessee, unless there is a corroborative evidence on record, because the maker of statement can bind himself, but how he bind others from his statement without there being any further evidence on record.

sheet found in the premises of M/s. M V V

Builders and admission made by the third party in their assessment proceedings. There is no other evidence on record to prove that on money is paid to the assessee towards purchase of site. We further noticed that Sri M V V Satyanarayana. while deposing before the investigating officer has stated that he has paid money to Sri P. Koteswara

Rao towards settlement of land disputes. But nowhere stated that he had paid on money to the assessee towards purchase of Venkojipalem site.

The AO without bringing on record an evidence to prove that on money is exchanged between the parties.

13 …….. merely harping upon loose sheet and third party statement, which cannot be considered as conclusive evidence against the assessee to bring on money to tax as undisclosed income. The A.O. is required to bring further evidence on record to show that actual money is exchanged between the parties, but literally failed to do so. The AO did not conduct any independent enquiry relating to value of the property, instead merely relied upon statement given by the purchase of the property which is not covered. Further, there is no evidence with the A.O. that money has been exchanged between purchaser and seller.

Therefore, we are of the view that the A. 0. is not correct in making additions towards on money without there being any evidence to show that the assessee has received anv money over and above what was stated in the sale deed.

………

that on money exchanged between the parties based on a loose sheet found in the premises of a third party and also statement given by a third person. To sustain the addition, the A.O. should have taken an independent enquiry about the value of the property and ascertain whether any under valuation is done, if so what is the correct value of the property. Further, the A.O. failed to bring any evidence to support his findings that there is on-money payment over and above what is stated in the sale deed. In the absence of proper enquiry and sufficient evidences, we find no reasons to confirm the additions made by the A.O. The CIT(A) without appreciating facts, simply upheld additions made by the A.O. Hence, we set aside the order passed by the CIT(A) and direct the A.O. to delete the additions made towards alleged on money for the assessment years 2007-

08 & 2008-09.

in &252IVizag/2012 are allowed.

8.4 In the case of K.V Lakshmi Savitri Devi vs. ACIT (2012) 148 TTJ 157, ITAT Hyderabad Benches has held as under:- "Admittedly there was no search action in the case of the assessee. It is a loose slip containing certain entries recording the payment which was found at the premises of CRK. It does not contain either date of payment or name of the person who has made the payment. According to the Department, CRK denotes C Radha Krishna

Kumar and KRK denotes K. Rajani Kumari.

However, no name of the assessee was found in the louse sheet. The property was purchased from P w/c CRK for a disclosed consideration of Ps. 65 lakhs bv the assessee. The property has been registered and the sale deed was executed for a consideration of Ps. 651akhs on 21st Aug., 2006 which consideration has been accepted by the State registration authorities. Further nothing was brought on record to show that there was any invoking of s. 50C while completing the assessment in the case of the seller. There is no evidence other than the seized material marked as 'A/CRK104' where relevant entries are made at Rs. 1,65,00,000. The seized material was not found at the premises of the assessee and there is no corroborative material to suggest that the assessee has actually paid Rs. 1.65 crores towards purchase consideration of the property,

The assessee and her brother categorically denied the payment of any money over and above

Rs. 65 lakhs. The AO placed reliance on the statement of 5, who is a third party, The evidence brought on record by the Department is not enough to fasten additional tax liability on the assessee. As seen from the above document this is just a handwritten loose document and the handwriting is also not of the assessee and the loose document was found at the premises of a third party. The burden on the Department to prove conclusively that the loose document belongs to the assessee. There is no presumption in law that the assessee has actually paid Rs.

1651akhs towards purchase of the property. The undisclosed income in this case is to be computed by the AO on the basis of the available material on record. It should not be based on conjectures and surmises. As of now, the material considered by the AO for making the addition of Rs. 1 crore is seized material marked a 'A/CRK104' and the statement of 5. This loose sheet found at the premises of CRK is not enough material to sustain this addition. The seized material found during the course of search and the statement recorded are some piece of evidence to make the addition.

The AD has to establish the link between the seized material and other books of account to the assessee. The seized material and statement of CRK cannot be conclusive evidence to make this addition. The entire case herein is depending upon the rule of evidence. There is no conclusive presumption to say that actual consideration passed on between the parties is actually Rs.

165lakhs. The assessee as well as her brother stated in their respective statements that the consideration passed between the parties is only

Rs. 65lakhs. In spite of this the AO proceeded to conclude that the seized material is conclusively reflecting the payment of consideration at Rs.

165lakhs. The Department herein is required to establish the nexus of the seized material to the assessee. As stated earlier there is no date and name of the assessee. The allegation of the Department is that the seized material denotes the payment made by the assessee to the purchaser for purchase of the property. However, no such narration or name of the assessee was found in the seized material. The Department is not able to unearth any document or material or any corroborative material to show that the assessee herein actually paid Ps. 1651akhs for purchase of the property. The Department has not brought on record the date on which the payment was made and the source from which ii is paid and/or any details of bank account from where the cash was withdrawn. Without any of these details, the Department has taken a view that the assessee has paid Ps. 1651akhs for purchase of the property. The Department cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong cannot take place of material in support of the finding from the AO. The AO should act in a judicial manner, proceed with judicial spirit and come to a judicial conclusion. The AO is required to act fairly as a reasonable person and not arbitrarily and capriciously. The assessment made should have enough material and it should stand on its own legs. The basis for addition cannot be only the loose sheet or a third party statement In the absence of the corroborative material and/or circumstantial evidence, the addition cannot be sustained Thus, no addition can be made on a dumb document and noting on loose sheet. It should be supported by the evidence on record and the evidence on record is not sufficient to support the Revenue's action. In a block assessment undisclosed income has to be determined or the .basis of the material and evidence detected in the course of the search action. The circumstances surrounding the case are not strong enough to justify the addition made by the Department. The burden of proving the actual consideration in the purchase of property is on the Revenue. Considering the entire facts of the case, the Revenue has failed to discharge its duty, instead made up a case on surmises and conjectures which cannot be allowed. Under these circumstances, there is no reason to confirm the addition of Rs. 100 lakhs towards on-money payment. Accordingly, the addition of Rs. 100 lakhs is deleted. CIT vs. P. V.

Kalyanasundaram (2006) 203 CTR (Mad) 449:

(2006) 282ITR 259 (Mad) relied on”.

8.4.1 The Hon’ble A.P. High Court in the case of K Lakshmi Savitri Devi (Supra) in of 2011 has upheld the order of the Tribunal. "We are of the view that the Tribunal has rightly held that the registered document dt. 21.8.2006 under which the respondent purchased the above property showed that only Rs.65. 00 lakhs was paid to the vendor by the respondent: that there was no evidence to show that the respondent had paid Rs.l. 00 crore in cash also to the vendor; that no presumption of such payment of Rs.1.00 crore in cash can be drawn on the basis of an entry found in a diary loose sheet in the premises of C. Radha Krishna Kumar which is not in the respondents handwriting and which did not contain the name of the respondent or any date of payment or the name of the person who made the payment. It rightly held that the Revenue failed to establish the nexus of the seized material to the respondent and had drawn inferences based on suspicion, conjectures and surmises which cannot take the place of proof. We also agree with the Tribunal that the assessing officer did not conduct any independent enquiry relating to the value of the property purchased and the burden of proving the actual consideration in the purchase of the property is on the Revenue and it had failed to discharge the said burden.

8.5 In the case of CBI vs. VC Shukla (1998) 3 SCC 410) it has been held that the loose sheets of paper cannot be considered to be books. 8.6 In the case of CIT vs. PV Kalyansundaram (294 ITR 49) it has been observed as under:- "Notings on the loose pieces o{paper on the basis of which the initial suspicion with regard to the under valuation had been raised were vague and could not be relied upon as it appeared that the total area with respect to the sale deed and that reflected in the loose sheet was discrepant. It was also observed that as per the guidelines for registration the fair value for registration on the relevant date was Rs.244 to Rs.400

per Sq. ft. and the sale consideration for Rs.850/-

per sq. ft. claimed by the Revenue was unrealistic

and ignored the ground situation.

analyse the facts of the present case. Here a paper is found during the course of search on 6.11.2008 and assessment of search made by the AO u/s. 143(3) of the Act. In fact AO should have proceeded to act u/s. 153A of the Act. AO should also have recorded his satisfaction in this case u/s. 153A of the Act. Even otherwise, the document shown before us does not have the date of transaction where amount of Rs.

96 lakhs is alleged to have been transferred by appellant to other person. Further the AO has also stated that the transaction is also corroborated by the date of cheque transaction. We do not found any cheque transaction where assessee is involved in the present transaction which is allegedly taxed in the hands of the assessee. Much to say that there was no date of cash transaction as alleged then it is surprised how AO has correlated the date with other transaction. Even otherwise when the assessee had denied the transactions, AO should have examined the recipient of search stated in that document and then confronted the assessee with the same. All these exercise have not at all been carried out by the AO. Furthermore, the presumption stated u/s. 292C of the I.T. Act is a rebuttal presumption.

Therefore, when the assessee herself denied any such transaction, it cannot be stated that the actual transaction has taken place between the assessee and the person concerned whose name mentioned therein. Further the Circular No. 24 of 2015 dated 31.12.2015 also supports the case of the assessee that satisfaction should have been recorded in the case of the appellant u/s. 153A of the I.T.

Act. As the Ld. Counsel for the assessee has also argued that no satisfaction has been recorded. The CBDT Circular which is based on the decision of the Hon’ble Supreme Court of India in the case of CIT vs. Calcutta Knitwears (2014) 43 taxmann.com 446 (SC) provides as under:-

SECTION 153C, READ WITH SECTION 158BD, OF THE INCOME-TAX ACT, 1961 - SEARCH AND SEIZURE - ASSESSMENT OF INCOME IN CASE OF OTHER PERSON - RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD/153C OF SAID ACT CIRCULAR NO.24/2015 [ENO.279/MISC.l140/ 2015/ITJ], DATED 31-12-2015

The issue of recording of satisfaction for the purposes of section 158BD/153C has been subject matter of litigation.

2. The Hon'ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No. 3958 of 2014 dated 12-3-2014 [2014] 43 taxmann.com 446 (SC) (available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person uls 158BD. The Hon'ble Court held that "the satisfaction note could be prepared at any of the following stages:

(a) at the time of or along with the initiation of proceedings against the searched person under section 15 C of the Act; or (b)t in the course of the assessment proceedings under section 158BC of the Act; or (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person. "

9.1 The above Circular states that even if the AO of the search person is one and the same then he should also record the satisfaction. Leaving aside the matter on satisfaction in this case the assessment has also been made disregarding the provisions of the search as provided under Chapter XIV-B of the Act. Once again at the cost of repetition the date of search is 6.11.2008 and the assessment year involves before us is assessment year 2009-10 and further addition has been made on the basis of the document impounded during the course of search at the residence of the assessee. The AO has proceeded to make an assessment u/s. 143(3) of the I.T.

Act. Therefore, the Appellant succeeds on the issue of satisfaction in view of the CBDT’s Circular stated above and also on the merit as the sole addition has been based on the document in which one transaction is allegedly sold without mentioning the date and further no corroborative evidence of any investment made by the assessee was found. Further the document is also unsigned and undated, the addition made in the hands of the assessee of Rs. 96 lacs cannot be sustained. In view of this, we reverse the finding of the Ld. CIT(A) by confirming the addition of Rs.

96 crores in the hands of the assessee under the provisions of section 292C of the I.T. Act, 1961.

It is also surprising to note that in the present case the penalty has been initiated under the provisions of section 271AAA of the Act, this relates to the search assessment, but the AO has made assessment under the regular provisions of the I.T. Act.

9.2 In the background of the aforesaid discussions and respectfully following the precedents as aforesaid, we delete the addition in dispute and allow the ground no. 1 to 3 raised by the assessee.”

7.3 In the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, the addition in dispute is hereby deleted and orders of the authorities below are cancelled.

Order pronounced in the Open Court on 28/03/2017.