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Before: SHRI G.D. AGRAWAL. & SHRI CHANDRA MOHAN GARG
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
These two appeals filed by the Revenue are directed against the order of the CIT(A)-XXXII, New Delhi dated 28/10/2012 for A.Ys 2006-07 & 2007-08.
Ground No. 3 is general in nature and no adjudication required on the same. Main effective ground of the assessee reads as under:
“1. The Learned CIT(A) erred in admitting additional evidence under Rule 46A.
2. The learned CIT(A) has erred in law and on facts of the case in deleting the addition of Rs. 96,41,952/- on account of unexplained expenditure u/s 69 of the Act.”
Ground No. 1
Apropos Ground No. 1, we have heard the rival contentions and have perused the relevant material on record. The ld. counsel of the Revenue pointed out that he ld. CIT(A) has erred in admitting and considering additional evidence in violation of provisions of Rsule 46A of the Income-tax Rules, 1962 [hereinafter referred to as the Rules].
Per contra, the ld. AR replied that the ld. CIT(A) called remand report from the A.O which was submitted and after considering the same on the basis of logical analysis and cause shown by the assessee and taking into consideration the facts and circumstances admitted the additional evidence and thereafter the same was considered as per provisions of Rule 46A of the Rules. From the relevant operative part of the order, we observe that additional evidence alongwith written submissions were forwarded to the A.O and he submitted vide remand report dated 27.9.2013 which has been considered by the A.O. In the remand report the A.O has not controverted this fact that the A.O refused to bring on record the relevant evidence or are inclined to go with the conclusion of the ld. CIT(A) that there was sufficient reason for the assessee which prevented him to file relevant evidence during the course of assessment proceedings and the same was submitted during the first appellate proceedings under Rule 46A of the Rules. We are not agreement with the contention of the ld. counsel of the Revenue that the additional evidence has been admitted and considered in contravention of Rule 46A of the Rule as the ld. CIT(A) called remand report which was submitted by the A.O on 27.9.2013 and after considering the same additional evidence was admitted and considered by the ld. CIT(A) which cannot be said in contravention of Rule 46A of the Rules. Accordingly ground No. 1 of the Revenue is dismissed.
Ground No. 2
Apropos Ground No. 2 the ld. counsel of the Revenue vehemently argued that the ld. CIT(A) has grossly erred in deleting the addition of Rs. 96,41,952/- on account of unexplained expenditure u/s 69 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short]. He also pointed out that the impugned expenditure stands unexplained and added to the income of the assessee as the figures appearing in the seized documents for arranging loans from AMC is not acceptable. contended that the baseless addition has been rightly deleted by the ld. CIT(A).
7. On careful consideration of the above, from the relevant operative part of the impugned order, we observe that the ld. CIT(A) granted relief to the assessee by observing as under:
“ 19.1.6 The additional evidence alongwith the written submissions where forwarded to the Assessing Officer. Vide report dated 27.09.2013 the Assessing Officer furnished the report where in the Assessing Officer commented upon as under:
"4.2 The "Sapath Patra" only, in itself cannot be taken as an evidence for the justification regarding payment made by the assessee. The additions have been made on the basis of seized documents and after the case went through special audit u/s 142(2A). The assessee had neither file these evidences before special auditor (even during extended period of special audit) nor before the Assessing Officer. Thus it is apparent that it is an after thought and additional evidence submitted during post search cannot be relied upon until and unless the genuineness is proved beyond doubt. Since, the assessee has failed to discharge its onus, therefore, the additions have been rightly made by the Assessing Officer."
From the above, I find that the Assessing Officer did not challenge the affidavit filed as additional evidence by the appellant. The persons who gave the affidavits were not summoned u/s 131 and no 5 & 404/Del/2014 adverse material was brought on record. In the special audit report u/s 142(2A) in the statement of reconciliation of seized material with books of account as a point of reference the special auditor mentioned the khata nos. and khasra nos. against the ‘cash given’. The Assessing Officer did not ask the appellant regarding the ownership of the land tenements that were indicated in the report so that such information can be verified with the additional evidences filed. Where no evidence or cogent material is brought on record by the Assessing Officer, the submissions made by the appellant cannot be ignored. Moreover, the evidence filed by the appellant has its roots from the remarks made by the special auditor in his annexures.
19.1.7 The remand report was provided to the appellant to file his rejoinder vide dated 23.10.2013, the appellant filed the rejoinder on this issue the comments of the appellant regarding the unexplained expenditure are as under:
"Our further submissions with regard to the addition of Rs.96,41,952/- as unexplained expenditure u/s 69C of the Act are as under. These may be read in conjunction with out written submissions dated 30th November, 2012. full details of this addition are placed at pages 35 to 38 of the paper book.
Page 39 of the paper book contains sums of money which are the subject matter of addition. With regard to the sums specified, the respective vendor (Mr. Veerpal Singh) has furnished affidavit affirming that he has not received any consideration over and above the consideration as specified in the sale agreement entered into by him.
6 & 404/Del/2014 Thus the recipient has denied the cash payment alleged to be paid by the appellant The Assessing Officer has not commented adversely on this aspect In the remand proceedings, no further queries or information have been directed at the appellant with regard to these affidavits.
In the light of the above, the addition of Rs.96,41,952/- may please be deleted."
19.1.8 It is also pertinent to mention here, and also from the material on record that in Annexure 12 of the special audit report part-II the special auditor reconciled the cash payment as per the seized material and also the books of account at serial no. 1. In the remarks column it was mentioned as under:
“The payment has been made by SCL and shown as its inventory. However, this payment was made by SCL on behalf of PRPL and this correction was made in the F.Y. 2006-07 relevant to the A.Y. 2007-08. Accordingly, the payments made by SCL in cash on behalf of PRPL has been reported in PRPL at Point No. 15 of Annexure to Form 68 of the A.Y. 2006-07."
This fact was not brought on record by the Assessing Officer nor any query was posed by him to the appellant regarding the same. Only a part of the observation of the special auditor in the table form mentioned above was brought on record with regard to he cash given amounting to Rs.96,41,952/- which was treated as unexplained expenditure as deemed income under the head unexplained expenditure u/s 69C. From the remarks of the special auditor it is evident that the payment of Rs. 96,41,952/- was made by M/s Samaag Construction Ltd and was shown in its inventory. It was also stated that this payment was made on behalf of the 19.1.9 Section 69C can be invoked when the appellant only incurs an expenditure and such expenditure was not satisfactorily explained with regard to source of such expenditure or part thereof then the amount covered by such expenditure would be deemed to be income of the appellant. In the present case the expenditure was incurred by M/s Samsung Construction Ltd., another person on behalf of appellant and such expenditure was not incurred by the appellant. Since this expenditure amounting to Rs. 96,41,952 /- was incurred by M/s Samaag Construction Ltd. it would be taxed in its on hand. .Accordingly, the addition was made Assessing Officer amounting to Rs. 96,41,952/- on account of unexplained expenditure u/s 69C is hereby deleted.”
From the above, it is apparent that the impugned expenditure was incurred by M/s Samsung Construction Ltd which is another person, on behalf of the assessee and the same was not incurred by the assessee. These facts have not been controverted by the A.O in the remand report and by the ld. counsel of the Revenue during hearing before us. In this position of facts and circumstances, we are in agreement with the conclusion of the ld. CIT(A) that since impugned expenditure was not incurred by the assessee and it was incurred by M/s Samsung Construction Ltd can at the best be taxed I the hands of M/s Samsung and not in the hands of the assessee u/s 69C of the Act. The ld. CIT(A) was quite justified in deleting the addition and thus we uphold his conclusion. Consequently, Ground No. 2 of the Revenue being devoid of merits is dismissed.
Ground raised by the Revneue read as under:
“1. The Learned CIT(A) erred in admitting additional evidence under Rule 46A.
2. The learned CIT(A) has erred in law and on facts of the case in deleting the addition on account of unexplained expenditure u/s 69 of the Act.”
Ground No. 1
We have heard the rival submissions and have carefully perused the relevant material on record. The ld. counsel of the Revenue submitted that the ld. CIT(A) admitted and considered the additional evidence in contravention of Rule 46A of the Rules. However, on vigilant perusal of the impugned first appellate order, we are in agreement with the contention of the ld. counsel of the Revenue that the evidence which was sought to be submitted as additional evidence was not available with the appellant during the course of first appellate proceedings and therefore, the same could not be produced during the original assessment proceedings. From the impugned order of the ld. CIT(A), it is amply clear that the ld. CIT(A) after considering the remand report of the A.O and rejoinder of the assessee admitted and considered the additional evidence as mandate of Rule 46A of the dismissed.
Ground No. 2
We have heard the rival submissions and have carefully perused the relevant material on record. The ld. counsel of the Revenue contended that expenditure of Rs. 24,36,500/- as unexplained expenditure u/s 69C of the Act as the auditor of the assessee company observed that the assessee has made certain expenditure which was not found recorded in the regular books of accounts of the assessee.
The ld. Counsel of the Revenue vehemently pointed out that the ld. CIT(A) granted relief to the assessee without any reason or basis.
Hence the impugned order may be set aside by restoring that of the A.O.
Per contra, the ld. AR replied that he A.O made addition without considering the explanation and evidence of the assessee. The ld. AR also drew our attention towards eh relevant operative para 19 t 19.1.10 and contended that the ld. CIT(A) has given relief on justified and reasonable basis thus the impugned order requires no interference on this count.
CIT(A), we observe that the relied has been granted by observed as under:
“19. I have considered the written submissions of the appellant, perused the order of the Assessing Officer, the contents of the special audit report u/s 142(2A) and the assessment order, on perusal of the assessment record, it is seen that vide letter dated 11.07.2011, the appellant filed its explanation regarding the unexplained expenditure of Rs.24,36,500/-. 19.1 However, I find that in this regard the Assessing Officer was not fair as he did not even refer to the comments of the Special Auditor on this cash recording found on Annexure A-2, page 5 seized by party B-3. Without appreciating the additional evidence filed in conjunction with the audit report, he only choose to comment upon the confirmation or certificate field by M/s Apex Marine Consulting Co. Ltd., Korea where it was stated that they were acting as broker / intermediary for Samaag group of companies to arrange finances for their project planning through Korean Companies from 2006 onwards. In the said statement it was also stated that negotiations were arranged with M/s Landmark Worldwide, a Korean Construction company who agreed to fund the project of Samaag group subject to due diligence. After a period of certain interaction, negotiations failed between Samaag and M/s Landmark Worldwide as M/s Landmark Worldwide could not convince any banker in Korea to fund the project. It also stated that at the request of Samaag, a factual position was 11 & 404/Del/2014 brought around along with the rough working which was found during the search in Samaag group of cases. This letter vyhich was self-confirmatory was brought on record as a part of the assessment order. It is point to mention that document was relied by the appellant to evidence that they negotiated for foreign funding of their project as they were acquiring land from the farmers for development. At page 171 of the special audit report part-1 at para 3.5 the auditors observed as under: "3.5 Year wise details of reconciliation of cash payment as per POR and books of account along with annexures are given as under:
Assessment year Payment out of books Annexure 2005-06 Nil - 2006-07 Nil - 2007-08 24,36,500 13 2008-09 Nil - 2009-10 Nil -
Accordingly, addition for the AY. 2007-08 ofRs.24,36,500 are to be made."
19.1.2 In annexure 13, part II of the special audit report, the auditor remarked as under:
"Since the particular land is not in the books of account,- thus not shown in the annexure of 40A[3). Therefore we can take all these payments as expenditure from unexplained sources."
19.1.3 Again, at page 164 para 3.1 of the audit report, the auditors observed as under:
"3.1 From the perusal of such verification its has been 12 & 404/Del/2014 observed that there are 2 types of cash payments exceeding Rs.20,000/- one which is recorded in the books of accounts and I another cash payments which is unrecorded in the books of accounts. Accordingly, we have given the year wise cash payment in two parts, one part containing the payment which are covered u/s 40A(3) and recorded in the books of accounts. In the second part we have given the reconciliation of cash payment as per the seized materials and books of accounts. On reconciliation it has been observed that there were certain payments which were not recorded in the books of account and accordingly are subject to addition u/s 69C in respect of unexplained expenditure."
19.1.4 From the above remarks of the auditors, it is evident that the unexplained expenditure was derived at on the basis of the reconciliation of seized material with the books of account maintained by the appellant. If a certain transaction did not tally the said amount recorded on the seized page was treated as expenditure incurred from undisclosed sources. The seized page did not indicate the year in which such expenditure was incurred or the purpose.
19.1.5. The AR of the appellant argued that in Annexure 13, the auditor observed that Rs. 12,54,000/- was paid against Khasra no.2790. However, it was seen that no Khasra no. was mentioned. It was stated that khasra no. was appearing on page no. 4 where no such amount was written. It was stated that an amount of Rs.12,54,000/- was mentioned against Khasra no. 2761 which the appellant acquired under an exchange deed from M/s. Armaan
13 & 404/Del/2014 Promoters Pvt. Ltd. Besides the above, a balance amount of Rs.11,82,500/- was mentioned as pertained to Khasra no.2763, which too was a part of land under exchange deed with M/s. Armaan Promoters Pvt. Ltd. It was also stated that Khasra no.2790 was registered partly in M/s. Samaag Construction Ltd. and partly in M/s. Saga Developers Pvt. Ltd. It was also stated that this khasra was required from two persons namely Mr. Brahm Singh and Sewa Ram for a total cash payment of Rs. 12,65,842/-.
19.1.6 In the source of the appeal proceedings, additional evidences were filed as under: "Your Honour, the assessee is a Pvt Ltd. Company and filed his return of income u/s 139 on 30.03.2008 for the assessment year 2007-08, declaring a total income ofRs.13,830/-
A search and seizure operation u/s 132 of the IT. Act, 1961 was conducted by the Investigation Wing of the Department on 29.1.2009 in the case of M/s Saamag Group of cases. The assessee’s business premises situated at B-67, Sarita Vihar, New Delhi-110044 was also covered u/s 132(1) of the I.T. Act, 1961.
Accordingly, notice u/s 153A of the I.T. Act was issued to the assessee on 10.7.2009. In response to the said notice, return was filed on 6.11.2009 declaring same income as in the original return, i.e. of Rs.13,830/-.
The assessment of the appellant was completed u/s 153A/143(3) of the I.T. Act, 1961 dated 3.8.2011 on an enhanced income ofRs.24,66,770/-. The major addition ofRs.24,36,500/- is made u/s 69C as unexplained expenditure
It is imperative here to mention that the addition of impugned sum of Rs.24,66,770/- is made on the basis of workings done by the appellant company in furtherance of its real estate projects at Bamhettam Ghaziabad, UP. These workings were mainly done to make representations before the prospective financial participants in the project.
However, auditor has observed that Rs.12,54,000/- has been paid against Khasra no.2790. However this Khasra no. is not mentioned on such page. Khasra no 2790 is appearing on page no. 4 where no such amount is written. The impugned amount of Rs.12,54,000/- is mentioned against khasra no. 2761 Arman Promoters Pvt Ltd. Apart from this, the balance amount of Rs.11,82,500/- pertains to Khasra no. 2763 which too is a part of land under exchange deed with M/s Arman Promoters Pvt Ltd. A copy of the said exchange deed is enclosed herewith as an additional evidence under Rule 46A of the I.T Rules, 1962.
During the assessment proceedings, the appellant had provided all the details and documents as and when required by the Id. Assessing Officer in order to justify its claim that no monies were paid out of books of account the appellant had categorically stated that it was read to furnish affidavits from the farmers/owners of the land stating that the have not received any cash amount apart from what was agreed under the terms of the sale deed. However, the Id Assessing Officer refused to bring them on record. The appellant hereby prays to Your Honour, it is further submitted that the land bank was procured through various brokers/agent engaged for this purpose. All the transactions, whether in cheque or in cash, were done through these brokers. Copies of engagement letters and other correspondences with these broker are enclosed herewith.
Besides, the appellant also prays to submit herewith the copy of certificate of the Gram Pradhan of Village Bamhetta, certifying that no banking facilities were available in the village or nearby vicinity at that period of time.
Your Honour, it would pertinent here to mention that the search and seizure operation were carried out on the Saamag Group on 29.1.2009. The appellant’s business premises was also covered under such search along with other group companies.
During the search proceedings, the appellant could not have been able to provide all the documentary evidences. The entire group written submissions covered under search and assessment proceedings of near about more than 40 assessee (i.e. 40x6 = 240 cases) were on full swing. The appellant was also under pressure, mental and otherwise, to ensure the completion of all the cases and thus could not concentrate to trace all the relevant documents at that time.
Your Honour, these papers were fetched later on, after the 16 & 404/Del/2014 completion of the assessment proceedings. the appellant prays and seeks an opportunity to file those documents/evidences under rule 46A of IT. Rules 1962. It is, therefore, respectfully submitted that the additional evidences as enclosed herewith may kindly be admitted as additional evidences.
It is humbly submitted that these copies were not produced before the Ld. AO either because he refused to bring them on record or because they were not traceable at that point of time as well as because of the pressure, the appellant was into, on account of assessment of search and seizure cases of group, including companies and all individuals of family. This may please be considered to constitute sufficient cause for not providing these various evidences before the learned AO
"It is, therefore, prayed to admit the following documents as additional evidence under Rule 46 A of Income Tax Rules,1962:
(ij Sample copy of affidavit from farmers stating on oath that no payment, other than those mentioned in the Sale Deed, has been made to them,
Copies of engagement letters and other correspondence (ii) with one of the brokers, and Copy of certificate of the Gram Pradhan ofVillege (iii) Bamhetta, certifying that no banking facilities were available in the village or nearby vicinity at that period of time Now coming to Rule 46A, your Honour, the Rule 46A (relevant portion) is reproduced here below:
46A. (1) The appellant shall not be entitled to produce before the [Deputy Commissioner [appeals)] [or, as the case may be, the commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the [Assessing Officer], except in the following circumstance, namely:-
(c) Where the appellant was prevented by sufficient cause fromproducing before the [Assessing Officer] any evidence which is relevant to any ground of appeal; or Your Honour, there is a sufficient cause with the assessee for not submitting these papers and are now being raised before your Honour as additional evidence. However, other relevant details had been duly submitted.
The kind attention of you Honour is invited on the judgment of the Hon’ble Bombay High Court in the Case ofCIT vs. Suretech Hospital and Research Centre Ltd. [2007] 293 ITR 53 wherein the Hon’ble Bombay High Court dealt the situation where question of invoking Rule 46A by the CIT (Appeals) was raised by the revenue.
Your Honour, in this case, the confirmation from various
18 & 404/Del/2014 creditors could not have been submitted before the AO at the time of the assessment and were submitted before the Ld. Commissioner of Income Tax (Appeals). The Tribunal held that in the light of Rule 46A (4), the Commissioner of Income Tax (Appeals) ought to have permitted the assessee to produce confirmation letters given by 12 unsecured creditors as the same were necessary for disposal of the appeal on merits.
Accordingly, the Tribunal set aside the addition ofRs.6,06,725/- and remanded the matter for fresh consideration. The order of the Tribunal had further been challenged in the High Court and High Court held that the first contention of the Revenue is that the Tribunal was not justified in invoking Rule 46(A) (4) of the Income Tax Rules and allowing additional evidence to be produced before the Commissioner of Income Tax (Appeals) for the first time. It is contended that the mere fact that the evidence sought to be produced is vital and important does not provide the ssubstantial cause to allow its admission at the appellate stage when the evidence was available to the assessee at the initial stage and was not produced bv him. In our opinion. there is no merit in this contention because rule 46AL41 provide that notwithstanding rule 46A(1 L the appellate authority can permit production of documents which enable him to dispose of the appeal In the fact of the case, the finding gven by the Tribunal is that the documents produced were necessary for disposal of the appeal on the merits and no question of law arises from such finding of fact recorded bv the Tribunal.
Your Honour, the appellant on the issue of additional grounds with additional evidence, further draws your kind attention on the judgments of Mumbai Bench of ITAT in the case of JCIT vs. Grasim Industries Ltd. AIT 2011 140 ITAT (Mum). In this case, the Hon.ble ITAT after considering the various judgements and relying upon the Hon'ble Apex Court's judgment in National Thermal Power Corporation vs. CIT229ITR 383 (SC) and Jute Corporation of India Ltd. vs. CIT 187 ITR 688 (SC) observed as under:
"25. We fails to see any prejudice that would be caused to the revenue, if the issue is examined afresh by the AO. The objection that the additional ground should not be admitted seems to suggest that tax liability can be fastened on a taxpayer even without deciding existence or otherwise of such liability in accordance with law. In this regard we are also of the view that approach in such matters would be different when the revenue seeks to fasten liability on an assessee at the stage of proceedings before the Tribunal on a basis different from one that was adopted by the revenue authorities. The reasons are that an assessee has no further avenue to project his grievance except before the Tribunal. If on the facts and in law, ultimately it is found that the assessee is not liable to tax, the revenue cannot have grievance. Art 265 of the Constitution of India provide that no tax shall be levied and collected except by authority of law. If ultimately the assessee is found to be liable to tax, he compensates the revenue in the form of interest Therefore, the Tribunal can even think of a remand of the case for a finding on facts or can adjudicate on facts itself. On the other hand the revenue has other options open to it under the Act If the order of an Assessing Officer is erroneous and prejudicial to the interests of the Revenue the same can be revised by the CIT u/s 263 of the Act. If income chargeable to tax escapes assessment, proceedings u/s 147 can be initiated to bring to tax such escaped income. In an appeal by the assessee against the order of assessing officer, the CIT(A) has power of enhancement u/s 251(1) of the Act 26. The next argument put forth by the Learned D.R. before us that the power of the AO prior to 1 -4-89 to call upon the assessee to produce evidence in support of the claim in the return of income was much wider viz., “to ensure that the return is correct and complete" whereas after 1-4-89, such powers are restricted only in the cases of “understatement of income, computation of excessive loss or underpayment of tax”. Therefore, according to the learned D.R. after 1-4-89, the powers of the AO while making an assessment while completing the original assessment being very ) limited, cannot be enlarged by the Tribunal by admitting additional ground, which the AO could not have considered while completing the original assessment According to the Learned D.R. because of the change in the policy of the Government in the matter of making assessment, the 21 & 404/Del/2014 decision of the Hon'ble Supreme Court in the case of NTPC (supra) should be applied keeping in view the above change. We are of the view that the argument put forth by the learned D.R. cannot be accepted because the arguments overlooks the principle that tax liability has to be determined in accordance with law. Even otherwise the limitation of the powers should apply only to AO and the Assessee should not lose right to demand assessment of correct income to tax in accordance with law. In other words, the Revenue should not be permitted to put its own inability as a defence to deny a legitimate claim made by an Assessee. We are of the view that fundamental principle laid down by the Hon'ble Supreme Court in the case of NTPC (supra)is that there can be no tax liability without the authority of law and this principle will hold good at all point of time. We therefore reject this argument of the revenue. The argument that the power of the Tribunal to entertain additional ground of appeal should also be considered to be restricted because of the change in the law referred to above also deserve to be rejected for the reasons given above. Your Honour, the Hon’ble Supreme Court of India, in the case of Collector, Land Acquisition vs. Mst Katiji [1987] SCR (2) 387, while deciding a matter of condonation of delay in revenue matters, had observed as under:
2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the higher that can happen is that a cause would be decided on merits after hearing both the parties.
4. When the substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserve to be preferred, for the other side cannot claim to have vested right in justice being done because ofnon-deliberate delay.
6. It must‘ be grasped that the judiciary is expected not on account of its power to legalize on technical grounds but because it is capable of removing injustice and is expected to do so."
Under the above circumstances and in the interest of the natural equity and justice, the assessee prays before your Honour, for admission of the additional evidences, which could not have been submitted before the Ld. Assessing Officer at the time of assessment proceedings."
19.1.7 With so much information on hand the Assessing Officer did not conduct any enquiry / investigation during the period of remand pertaining to the cash payments mentioned as above the additional evidences filed u/s 46A. No evidence was brought on record to say that the appellant incurred payments / made outside the books. The notings on the page 5 of Annexure A- 2 was verified with the books and when it did not tally, it is presumed as payments made outside the books by the special auditor. The Assessing Officer did not independently verify that the cash paid to farmers was whether they are duly reflected in the books of account of the appellant as claimed by it. No evidence was placed on record by the Assessing Officer to say with conviction that the appellant
19.1.8 The appellant relied on the following case laws in support of this ground:
Dhakeshwari Cotton Mills Ltd. vs. CIT 26 ITR IT (SC) 1. CIT vs. Mahindra & Mahindra Ltd. 144 ITR 225 (SC) 2. Gujarat Gas Co. Ltd. vs. JCIT 245 ITR 84 (Guj.) 3. ITO vs. Sheo Narain Jaiswal 176 ITR 352 (Patna) 4. CIT vs. Girnish Choudhary 256 ITR 919 (Del.) 5. CIT Ashwini Kumar vs. ITO 39 ITD 183 (Delhi Bench Hon’ble 6. Tribunal)
19.1.6 Besides the above, I also place reliance in the judicial pronouncement of Hon’ble Supreme Court in the case of Central Bureau of Investigation vs. VC Shukla (1998) 3 SCC 410 where it was held as under:
"It is not enough merely to prove that the books have been regularly kept in the course of business and tfje entries therein are correct It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts. Such entries though relevant were only corroborative evidence and it is to be shown further by some independent evidence that the entries represent honest and real transactions and that monies were paid in accordance with those entries. Even correct and authentic entries in books of accounts cannot without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view
24 & 404/Del/2014 of above principles, even if it is assumed that entries made in MR 71/91 are correct and the entries in the other books and loose sheets (which have already been found to be not admissible in evidence u/s 34) are admissible u/s 9 of the Act to support an inference about the former's correctness, still those entries would not be sufficient to charge Sh. Advani and Sh. Shukla with the accusations leveled against them for their not an iota of independent evidence in support thereof.
19.1.10. In view of the above discussion as the A.O did not give a categorical finding on the basis of the enquiry carried out pertaining to the seized page no. 5 of Annexure A- 2, the addition made by the Assessing Officer amounting i to Rs.24,36,500/- treating the same as unexplained expenditure u/s 69C is hereby deleted.”
From the above relevant part of the order of the ld. CIT(A), at the very outset, we note that some vital and relevant evidence which could not produced during the assessment proceedings was admitted and considered by the A.O u/r 46A of the Rules. Even during the remand proceedings the A.O did not refer to any comments of special auditor on the recording found in Annexure A-2 at page 5 seized by the party B-3 i,e, assessee. The A.O did not make any comment on the additional evidence in the light of audit report and he only commented on the confirmation certificate issued by M/s Apex Marine Consulting Co. Ltd, Korea. The assessee also filed evidence with due diligence that it land from the farmers for development and in the remand report he could not controvert the factum that at the request of the Samaag, a factual position was brought with the rough working which was found during the search in Samaag group cases. It was also noticed by the ld. CIT(A) that he negotiations in this regard failed between Samsung and M/s Landmark worldwide as M/s Landmark could not convince any banker in Korea to fund this project. The ld. CIT(A) also correctly observed that if certain transactions did not tally and said amount is recorded on the seized page treated as expenditure incurred from undisclosed sources but seized page did not indicate the year in which such expenditure was incurred for the said purpose.
The ld. CIT(A) in para 19.1.5, as reproduced above, recorded a reasonable finding to show that the special auditor observed that Rs. 12,54,000/- was paid against Khasra No. 2790 but no Khasra No was mentioned against the said amount. He also observed that Khasra number was appearing on page 4 where no such amount is written.
The ld. CIT(A) also noted that the Khasra No. 2761 was acquired by the assessee under exchange deed from M/s Arman Promoters Pvt Ltd and in our opinion it is sufficient to explain the fact that no expenditure has been incurred by the assessee from undisclosed sources to acquire land of Khasra No. 2761 and it was acquired under exchange deed with
The ld. CIT(A) also recorded a categorical finding on the basis of proper appreciation of facts that the balance impugned amount of Rs. 11,82,500/- as mentioned and alleged by the special auditor, as pertained to Khasra No. 2763 was also part of exchange deed with M/s Arman Promoters Pvt Ltd and other disputed khasra No. 2790 was registered partly in the name of M/s Samaag Construction Pvt. Ltd and partly in M/s Saga Developers Pvt Ltd. Thus the allegation of special auditor that Khasra No. 2790 was acquired by the assessee from the persons namely M/s Brahma Singh and Mr. Sewaram for actual cash payment Rs. 12,65,842/- could not be found sustainable on the basis of correct appreciation of facts. Thus we reach to a conclusion that the A.O made addition u/s 69C of the Act without conducting any enquiry or investigation even during remand proceedings in regard to impugned cash payments allegedly have been made in cash out of income earned from undisclosed sources. From the assessment order and remand report, we note that the A.O has not brought any evidence and material to corroborate the fact, noticed by the special auditor, which prompted the A.O to make additions, and the A.O did not independently and cautiously examined the cash payments allegedly made to the farmers as to whether the same are recorded in the books of accounts of the assessee or not. Therefore, we are unable to approve the conclusion of from undisclosed sources which could substantiate addition u/s 69C of the Act. It is also pertinent to mention that as per allegations of the A.O the assessee made payments in cash to acquire land from farmers and made addition u/s 69C of the Act which is relevant to unexplained expenditure and as observed as to allegations of unexplained expenditure out of income from undisclosed sources has not been found to be sustainable. Thus addition made by the A.O was rightly deleted by the ld. CIT(A). In these circumstances, as we are inclined to hold that the ld. CIT(A) recorded a logical conclusion which requires no interference as we are unable to see any valid reason for disturbing the same and thus we uphold the order of the first appellate authority on this count. Accordingly, ground No. 2 of the Revenue is dismissed.
In the result, both appeals of the Revenue are dismissed.