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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order dated 18.03.2013 of the ld. CIT(A)-II, New Delhi for the Assessment Year 2009-10 where in solitary ground raised as under :- “The Ld. CIT (A) erred in facts and in law confirming the addition of Rs. 30,54,000/- which is not only bad in law but also against the facts and circumstances of the case.”
2. The brief facts of the case are that appellant company is a private limited company engaged in the business of real estate. The facts noted by the Ld. assessing officer that in this case,the investigation wing conducted survey u/s 133A on 20 of October 2008 and pursuant to survey, notices under section 142 (1) and 143 (2) dated 24/09/2010 were issued. In response to these notices, the assessee filed copy of the return already filed by it. The reason for the survey conducted on the assessee was that it has an interconnected business activity Prime IT Solutions private Limited V DCIT Cen. Circle 17 New Delhi A. Y. 2009- Page 2 of 10 with „M/S Thapar Home‟ group of cases, which was, searched on the same day u/s 132 of the Income Tax Act. During the course of search at place of one of the director of the group loose paper being page No. 1 and 2 of Annexure A – 12 was impounded. According to ld. Assessing Officer, these pages contained details of the area booked by various concerns in one project where the appellant along with two other companies were developers, showing square feet, rate per square feet, amount in cash, amount by cheque and balance amount. According to the AO, the parties who booked the area are dummy concerns of M/s Thapar home group, and these parties were held to be bogus entities engaged in huge capital formation operated by Mr. . B K Dhingra. During the course of assessment proceedings, the assessee denied any financial implication of the seized document stating that these pages are not pertaining to the assessee company and do not have any business relationship with the person searched from whom paper is impounded. It was further stated that that the premises wherefrom the document seized also does not belong to it. Learned AO rejected the contention of the assessee. According to him, seized document is a chart showing names of 66 parties and against their name area booked in square feet, rate per square feet and total advance payment is mentioned. Next columns shows amount in cheque, cash, cheques issued and balance amount. On analysis of that chart, total amount was of Rs. 34,14,000/- which was not shown as receipt, ld. AO added it as unexplained cash credit and consequently the total income was assessed at Rs. 5288560/- u/s 143(3) of the Act.
Appellant assessee aggrieved with the order of the Ld. AO preferred an appeal before the Commissioner of Income Tax (Appeals). Before the Ld. CIT (A), Assessee submitted that the addition was made on surmises and conjectures. Shri BK Dhingra was the third party who had no connection with the appellant that as per heading of the chart seized it merely listed parties „taking interest in the residential projects‟. He submitted there is no signature of the director/ Prime IT Solutions private Limited V DCIT Cen. Circle 17 New Delhi A. Y. 2009- Page 3 of 10 shareholder on it. Therefore, burden of proof rests with the revenue. He further submitted that no cheques were ever transacted as per the bank statements as the counterfoils of chequebook seized by the Income tax department. Assessee filed confirmation from parties before the Ld. AO which was rejected by him without examination. Based on the above facts and circumstances the Ld. CIT (A) decided the issue against the assessee confirming the addition of Rs. 30,54,000/-. Reasons given for confirming the addition by ld. CIT (A) that noting on the pages are not projections but record of real events. According to him counterfoil of the chequebook is a basic and primary record created by the drawer of the cheque immediately upon writing of the cheque since the entry of six cheques in the counterfoil corroborate the six entries recorded under the column 6 in the seized chart. Further provisions of section 292C of the Act, which raises the presumption about the correctness of the contents of the seized documents and according to him as the transaction made by the cheque is corroborated by the primary document comprising the counterfoils of chequebooks that were seized from the residence of the director of the Thapar group of company. This according to him was sufficient to establish the correctness of the rest of the document. On confirmation, he stated that the Ld. AO correctly rejected them without carrying out the requisite verification, as those were identical even in their punctuations. Therefore, according to him it was obvious that all the parties including the appellant company are closely connected to one another and in the circumstances when there are clear nexus of the transaction the confirmation obtained by the assessee would be meaningless and futile. He therefore held that non-issue of summons or notices to examine the parties was justified.
Against the order of the Ld. CIT (A), the assessee is in appeal before us as per solitary ground of appeal
.On the merit of the addition, he submitted that the 3 companies have jointly purchased agricultural land at village Gharauli Gurgaon, in financial year 2007 – 08 and after amendment to the master plan of Gurgaon Prime IT Solutions private Limited V DCIT Cen. Circle
17. New Delhi A. Y. 2009- Page 4 of 10 the revised application for grant of license was made and the authorities have granted the license only in financial year 2012 – 13. Therefore, there is no such project in existence at that time and no one will pay in FY 2008-09 for which project that has not started even in FY 12-13. He further submitted that along with the search under section 132 conducted on Thapar group on 28th of October 2008 survey under section 133A was also carried on in the business premises of the assessee however during the course of survey no incriminating material has been found which can corroborate the seized document allegedly found from Shri B K Dhingra. He further submitted that during the search of the business premises of Shri B K Dhingra an unsigned computer printout was seized with which assessee does not have any connection as it neither belong to it , even otherwise there are no transactions taken place as counterfoils of the cheques unless transacted in bank does not have any value. He further submitted that the document itself says that these are the details of parties showing interest in the residential project. The transaction even otherwise has not taken place as confirmed by the 41 parties. During the course of the appellate proceedings before the Ld. CIT (A) this confirmations were brushed aside without any reason and on flimsy grounds. He further submitted that that the alleged document, which was relied upon by the revenue, was seized from the third party and it is the duty cast upon the revenue to state that these transactions have really taken place and the money involved there in constitute the undisclosed income of the assessee. In fact, there is no evidence found by the revenue and infact, all those cheques were never encashed in the bank account of the assessee. He further submitted that decision of Honourable Delhi high court relied up on by the Ld. CIT (A) is also not relevant as that was the case of the partnership firm and not of private limited company and where the statement of partner was taken , in this case there is no statement of any person connected with the company is taken at all. In view of the above facts, his Prime IT Solutions private Limited V DCIT Cen. Circle 17 New Delhi A. Y. 2009- Page 5 of 10 contentions were additions were wrongly made. Appellant submitted number of judicial precedents to buttress the claim.
The Ld. departmental representative mainly relied on the orders of the Ld. AO and Ld. CIT (A) stating that that the plea of the assessee that the transactions are yet to be entered into is not correct. Therefore, he submitted that that ld. AO has rightly made the addition and confirmed by the CIT (A) and therefore it may be upheld.
We have carefully considered the rival contentions and perused the orders of the lower authorities and the document seized. We have already discussed the brief facts of the case above. Now It is necessary to analyses the document seized, certified copies of which are placed on record by the parties. It is a chart accompanied with the counterfoils of cheque books of some of the companies named in the chart. Firstly we analyze the chart which is a computerized statement found from the premises of shri B K Dhingra. This chart has 12 columns. On the top of the chart the name of three companies are mentioned i.e. (1) Prime Infoways private Limited, (2) Prime IT solutions P Limited, (3) Phoneix dataTech Services private Limited (Appellant). These chart further states the names of 66 companies. There it is mentioned „ names of the parties in whom favors cheques are to be issued‟ . Further on that chart below on top also shows the names of the above three companies purportedly written in acronyms and below that square feet and area converted in to square meter is mentioned. Then the details of 66 parties are mentioned showing area booked, rate per square feet, total advance payment, then there is bifurcation between above three companies including appellant of the square feet area, next column shows amount of cheque , amount in cash and cheques issued, balance. Subsequent documents shows the cheque book counterfoils of six companies where in the counter foils of cheque books were found showing issue of cheques in the name of appellant and other two entities. Namely in case of party no. 1 listed in the statement is Akshya Aroogya mandir private limited from Prime IT Solutions private Limited V DCIT Cen. Circle 17 New Delhi A. Y. 2009- Page 6 of 10 cheque book counterfoil with kotak Mahindra Bank Limited shows issue of cheque in the name of one of these three companies of Rs 9,60,000/-. Further in case of party no 18 Micron steels limited , this companies cheque book counter foil with kotak Mahindra bank shows that a cheque of Rs 3,60,000/- is issued to the one of the three companies. Similarly, in case of three more companies such counterfoils of chequebooks were seized. Based on these evidences the addition is made by the Ld. AO and confirmed by the CIT (A). The seized documents vis a vis the reasons for addition are examined as under :- i. Above documents are not seized from the premises of the assessee but at the premises of third party who is neither the director nor the shareholder of the company. However neither the ld. AO as well as The Ld. CIT (A) has led any evidence that though the paper shows the names of the appellant along with two other companies but these papers are found from the third party i.e. Shri B K Dhingra and how is he associated with the appellant. Ld. CIT (A) has stated that Shri B K Dhingra is a close associate of Shri I M Thapar . Merely an assertion that somebody is close to one of the director cannot become the close associate of the appellant company itself. Ld. AO has not led any evidence that Shri Dhingra looks after the affairs of the company in any manner. the evidence of actual transaction of those parties and it is unaccounted income of these companies.. ii. On 20.8.2008 search on Thapar Homes Group as well as survey on the assessee were carried out. Admittedly, during the course of search the charts as well as the counterfoils of the chequebooks were found from Shri B K Dhingra. However, during survey no evidences with respect to the projects whether in existence or not for which the statement is found, whether the counterfoils of Prime IT Solutions private Limited V DCIT Cen. Circle 17 New Delhi A. Y. 2009- Page 7 of 10 cheques, which were relied up on whether cleared in the bank, account of the appellant were examined. Appellant has submitted that the there is no such project, assessee received no such booking and no such cheques were received in the bank account of the assessee. Revenue has not controverted this fact. As the said cheques have not at all been received by the assessee, merely because in the counterfoil of the chequebook of issuing party, name of the appellant is mentioned, it cannot result in to addition in the hands of the assessee unless it is cleared in the bank account of the appellant. iii. During assessment the appellant was not confronted with the statement of the person from whose possession these chart and also the counterfoils of the cheques of six companies were found. In fact, there is no averment in the order that any such statement is in possession of revenue. iv. Furthermore the name of all the parties in that particular statement wherein bookings in the name of those parties have been shown, appellant has filed confirmation of those parties stating that they have not booked any such premises and also apparently no payment have been made. On these confirmation ld. AO has neither issued any summons to those parties nor examined their bank statement about the issue of those cheques and whether these cheques have been cleared or not. The assessing officer and CIT (A) have brushed aside those confirmations as meaningless. In fact, on examination of those confirmations, reality of the reason for writing counterfoils of the chequebooks in the name of appellant and two other companies would have been known to revenue . The reason why those cheques were issued but were never came in to the bank accounts of the appellant and whether Prime IT Solutions private Limited V DCIT Cen. Circle 17 New Delhi A. Y. 2009- Page 8 of 10 they are really handed over to the appellant company is also not known to revenue. It is an uncontroverted facts that those cheques remaining non-transacted. Contrary to that appellant has discharged its onus by producing the confirmation of those parties that they have neither booked any premises with the appellant company and therefore have not paid any sum. v. It is the allegation of the revenue that these companies are the bogus companies floated by one Shri B K Dhingra and they are used for capital formation activities. This fact merely remains a conjecture and surmises in absence of any evidences led by revenue against that person i.e. Shri B K Dhingra and his connection with the appellant company. Merely making an assertion that Shri B K Dhingra is entry operator or the companies are formed for capital formation remains unsubstantiated allegation unless there are any evidences such as assessment orders etc of entry operator or the assessment orders of those companies operated by him. vi. Further assuming that those companies are the bogus companies, and then on looking at the chart we found that there are columns of „cash‟. If these amounts are the bogus amount introduced by the appellant company then we failed to understand that how the cash is also be received from those companies, whereas in general only commission is required to be paid to the entry provider and no cash is receivable from them. vii. Further, it remains uncontroverted that there was no project in the name of the appellant in impugned assessment year as there was no permission also. The facts of the acquisition of land are submitted by the Ld. AR and also stated the status of the project , which is not controverted. It is highly unlikely that the builder who Prime IT Solutions private Limited V DCIT Cen. Circle 17 New Delhi A. Y. 2009-