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Income Tax Appellate Tribunal, DELHI BENCH ‘H’ : NEW DELHI
Before: SHRI S.V. MEHROTRA & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, M/s. Sareen Estates Private Limited (hereinafter referred to as ‘the assessee’), by filing the present appeal sought to set aside the impugned order dated 03.02.2012 passed by the Commissioner of Income-tax (Appeals)-I, New Delhi qua the assessment year 2008-09 on the grounds inter alia that :- “1 That on the facts and in the circumstances of the case, the learned CIT(A) I, New Delhi, for the reasons stated in the impugned order, erred in law in upholding the order of the Assistant Commissioner of Income Tax Central Circle-7, New Delhi, in confirming the addition made in the assessment u/s 69A of the Act, by a sum of Rs.70,00,000/-. 1.2 That the learned Commissioner of Income Tax(appeals) while upholding the order of the learned AO failed to consider and appreciate the evidence filed being copy of the cash book for the period 1st April 2006 to 31st March 2007 which was filed before him at his behest, to establish that the cash in hand existed even as at 31st March 2007.
The Ld. CIT(A)-I, New Delhi, erred in not accepting the explanation offered by the appellant that the seized cash belonged to various entities of the group .
3. That the appellant, craves, leave to add, alter, amend, substitute, forgo, any or all the grounds of appeal
before or at the time of hearing.”
2. Briefly stated the facts of this case are : on the basis of search and seizure operation conducted on 12.09.2007 u/s 132 of the Income-tax Act, 1961 (hereinafter ‘the Act’), notice u/s 142 (1) of the Act was issued calling upon the assessee to file the return of income for the assessment year 2008-09. Assessee filed the return of income on 17.09.2009 declaring income of Rs.4,08,46,267/- qua AY 2008-09. Consequent upon the notices issued u/s 143(2) and 142(1) along with questionnaire, Shri Anil Kumar, CA and thereafter Shri Aditya Purwar, CA put in appearance and filed necessary details. Assessee is into the business of real estate development and construction activities. During the search, cash of Rs.73,43,000/- was found out of which Rs.70,00,000/- was seized from the business premises of the assessee. On failure of the assessee to prove on record the evidence for having aforesaid cash, assessment proceedings were initiated. During the assessment proceedings, ld. AR for the assessee submitted that the aforesaid cash belongs to four different companies. Finding the explanation furnished by the assessee not tenable, the AO made an addition of Rs.70,00,000/- to the income of the assessee being undisclosed income.
Assessee carried the matter before the ld. CIT (A) who has dismissed the appeal vide impugned order. Feeling aggrieved, the assessee came in appeal before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputed facts of this case inter alia are that the premises searched by the revenue authorities on 12.09.2007 was being used by 8/10, group companies, having same address; that the statement recorded during the search operation have been burnt in the fire which took place immediately after the search; that the AO made the addition on the ground that the assessee has failed to produce the documents during search; that the statements recorded and seized at the time of search have not been supplied to the assessee.
In the backdrop of the aforesaid facts and circumstances of the case, the sole question arises for determination in this case is “as to whether the assessee has explained source and genuineness of the seized amount of Rs.70,00,000/- having been belonging to its sister concern during the assessment proceedings?.
AO in order to made the addition by Rs.70,00,000/- to the income of the assessee returned the findings which are reproduced as under for ready reference :-
“4. During the search cash of Rs.73,43,000/- was found out of which an amount Rs.70,00,000/- was seized from the business premise of the assessee. The assessee was asked during the search to furnish proof of the source of the above cash on the date of search, but the assessee failed to show any evidence relating to the same. The assessee was asked during assessment proceedings vide order sheet entry dated 18.12.2009 to show-cause why the above amount shall not be added as income of the assessee for the year under consideration over and above the income already shown. The AR has submitted through letter dated that the above cash is cash in hand of the following companies as on the day of search :- Moonlight Continental Pvt. Ltd. Rs.25,00,000/- New Era Impex (India) Pvt. Ltd Rs.15,00,000/- Augite Estate Pvt. Ltd. Rs.15,00,000/- Ostrich Estate Pvt. Ltd Rs.15,00,000/- Total : Rs.70,00,000/-
The contention of the assessee was considered and but found not sustainable in as much as none of the companies could produce the cash book at the time of search from where the above amount seized could have been verified. In the event of the assessee failing to justify the source of the above cash, an amount of Rs.70,00,000/- was seized. In is a settle principle of law that in case the assessee fails to give any evidence regarding the source of any asset found at its premise during the search despite giving it sufficient opportunity, an adverse inference is imminent relating to the source of the above asset. In the case at hand the assessee failed to furnish the cash book showing the above cash in 'hand on the day of search. Hence, the above contention of the assessee that the cash found is actually cash in hand in all the above companies can safely be said to be an afterthought. Moreover, the statements recorded during the search were burnt in the fire that occurred immediately after the search. Hence the cash of Rs.70,00,000/- seized during the search, is treated as the undisclosed income of the assessee for the year under consideration. (Addition of Rs. 70,00,000/-)”
Ld. CIT (A), after calling upon the remand report, has not accepted the explanation furnished by the assessee that the seized cash belongs to other companies primarily on the ground that the assessee has furnished the cash book of the aforesaid company for the period 01.04.2006 to 31.03.2007 whereas search was taken place on 12.09.2007 and that summarized statement of cash deposit made during the period 01.04.2007 to 12.09.2007 does not bear signature of the Director or the auditor and kept the authenticity of the said document under doubt.
When the facts and circumstances of the case, documents brought on record by the assessee during assessment proceedings as well as remand proceedings, are examined in the light of the order passed by the lower revenue authorities below, we are of the considered view that there is no scope to interfere into the findings returned by the AO/ld.CIT (A) for the following reasons :-
(i) that no plausible explanation has come on record during the assessment proceedings or thereafter as to why the cash book, subsequently relied upon by the assessee, has not been produced before the AO particularly when the assessee company along with its sister concern was operating from the aforesaid office;
(ii) that even otherwise it is not the case of the assessee that some of its record was lying in some other office restraining him not to produce the same before the AO;
(iii) that there is no explanation as to why the summarized statement of cash deposit made by the assessee company during the period 01.04.2007 to 12.09.2007 placed before the CIT (A) was not signed by the Directors/auditors. It is difficult to admit any such statement into the evidence without the signature of any authorized signatory;
(iv) that the contention of the ld. AR that the cash book was seized at the time of search and seizure operation is not tenable because cash book only qua the period
01.04.2006 to 31.03.2007 was produced whereas the period under consideration was roughly starts after six months i.e. 12.09.2007, so non-filing of the cash book of the last six months authenticates the findings returned by the ld. CIT (A) that the same cannot be believed. Moreover cash book is a daily diary which is to be completed on day-to-day basis and to be kept and maintained at the office itself and not to be completed at the end of the financial year;
(v) that the assessee has not brought on record any material to prove as to how the cash has been built up in the bank as shown in the bank statement out of which the cash was allegedly withdrawn;
(vi) that the cash amount of Rs.30,00,000/-, shown at page
74 of the paper book, attributed to M/s. Moonlight Continental (P) Ltd. was shown deposited in September 2006 i.e. one year prior to the search showing least nexus with the seized amount;
(vii) that similarly, the amount of Rs.10,00,000/- each is shown deposited on 01.06.2006 in case of M/s. New
Era Impex (India) (P) Ltd., lying at page 78 of the paper book;
(viii) that in case of M/s. Ostrich Estate Pvt. Ltd., amounts of Rs.8,00,000/- and Rs.4,50,000/- shown at page 94 of the paper book as on 10.07.2006 and 01.08.2006 respectively and it is difficult to believe that the cash has been kept for a period of more than one year without any further explanation;
(ix) that auditing balance sheet of M/s. Moonlight
Continental (P) Ltd. for the year ending 2006-07 on 15.09.2007 after one month of the search and seizure in this case itself goes to prove that the record has been prepared anti-dated to create evidence. Similar is the case of M/s. New Era Impex (India) (P) Ltd.
M/s. Augite Estate (P) Ltd. and M/s. Ostrich Estate (P)
Ltd;
(x) that even perusal of the balance of all the companies in question as on 31.03.2007 apparently show that there is no substantive cash-in-hand with the said companies; (xi) that moreover when the cash book of the year under consideration was suppressed by the assessee intentionally at the time of search and seizure, as is evident from the copy of panchnama, nor produced the same during the assessment proceedings, earlier cash books produced by the assessee company are of no support to its case;
(xii) that the assessee has failed to prove the source of the cash of Rs.70,00,000/- found and seized from its premises on the basis of search and seizure conducted on 12.08.2007. So, the CIT (A) has rightly dismissed the assessee’s appeal.
In view of what has been discussed above, the present appeal filed by the assessee is hereby dismissed.
Order pronounced in open court on this 9th day of May, 2016.