DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, , VAPI vs. M/S MAHAVIR JAIN CHARITABLE TRUST, VALSAD

आयकर अपीलीय अिधकरण, सुरत �ायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER आ.अ.सं./ITA No.208/SRT/2023 (AY 2018-19) (Hearing in Virtual Court) Deputy Commissioner of M/s Mahavir Jain Income-tax, Central Circle-Vapi, Charitable Trust, 410/411, Vs 9th Floor, Fortune Square II, Amar Chambers, Station Daman Road, Chala, Vapi- Road, Opp. Lal School, 396191 Valsad-396001 PAN No. AAMTS 6784 K अपीलाथ�/Appellant ��थ� /Respondent

िनधा�रती की ओर से /Assessee by Shri Mehul Shah, C.A राज� की ओर से /Revenue by Shri Ritesh Misra, CIT-DR अपील पंजीकरण/Appeal instituted on 27.03.2023 सुनवाई की तारीख/Date of hearing 03.10.2023 उद्घोषणा की तारीख/Date of 18.10.2023 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue is directed against the order of Ld. Commissioner of Income tax (Appeals)-1, Vapi [for short to as “Ld. CIT(A)”] dated 09.01.2023 for the assessment year 2018-19, which in turn arises out of assessment order passed by Asstt. Commissioner of Income-tax, Central Circle-1 Vapi / Assessing Officer under section 143(3) of Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for the sake of brevity) on 11.09.2021. The Revenue has raised following grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs.5,60,00,000/- made on account of advances paid in cash for purchase of land despite the facts that addition has been made on the basis of incriminating details /

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust document recovered during the search proceedings from mobile phone back-up in which the details of cash payment were recorded.

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust pertaining to assessee-trust was also recovered. Such back-up indicated that the assessee was involved in purchase of properties for activities of assessee-trust. The Assessing Officer scanned the copy of such documents on page-3 of assessment order. The Assessing Officer further noted that during post-search, investigation and statement of Ketan R Shah, Director of M/s Shah Veerchand Govindji Jewellers Pvt. Ltd. was recorded under section 131 of the Act. During recording his statement, he was asked to clarify in respect of said incriminating seized papers. Ketan R Shah, in his statement stated that such seized papers are in respect of Shri Mahavir Jain International Public School. The Assessing Officer recorded that such incriminating seized papers indicates that the cash of Rs.5.60 crores has been given and a cheque of Rs.1.04 crores will be given then Rs.2.00 crores will be remaining. Further, writing on the seized paper shows the land of 17 vighas valued at Rs.9.01 crores. On the basis of such observation, the Assessing Officer issued show cause notice to the assessee about the explanation of such incriminating seized papers. The assessee filed its reply through ITBA portal on 16.08.2021. The Assessing Officer noted that in the reply, assessee stated “it is just estimate for other project land which was a proposed to be collected by inviting more trustees but which eventually not materialized hence the paper obtained during the survey shall not be relied upon and need to be disposed off accordingly”. The assessee also stated in its reply that Ketan R Shah, Director of Shah Veerchand Govindji Jewellers Pvt. Ltd, if not even trustee of their trust and statement should not be relied upon. 3

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust 3. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer noted that from the ledger account of token amount advance to invest the land owner, acknowledgement of which was scanned on page-4 of assessment order with contents the reference of Ketan R Shah which shows and was asked to explore the possibility of collecting more funds from different persons for the completion of this deal. The contention of assessee that incriminating seized papers was just estimate for collecting by inviting more trustees which were not ultimately materialized, was not accepted by Assessing Officer as the incriminating materials contain details of construction of class-room, purchases of benches and other school related purchase which clearly shows that assessee-trust entered into purchase of land at Chanvai, Taluka Valsad for an amount of Rs.39 lakhs. The assessee-trust has not furnished any evidence to show that there has been no advance paid for purchase of said land for cancellation of satakhat showing in the incriminating seized materials. The incriminating seized materials mentioned payment of Rs.5.06 crores in cash and corresponding advance has been given in financial year 2018-19 to Shri Rajendra Hirachand Shah as in the ledger produced by Ketan R Shah. On the basis of such view the assessing officer added Rs.5.06 crores to the income of assessee on account of advance paid in cash for purchase of land. The addition was taxed under section 115BBE in the assessment order passed under section 143(3) of the Act on 11.09.2021. 4. Aggrieved by the addition in the assessment order, the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A) assessee filed detailed written 4

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust submission. The submission of assessee is recorded in para-6.2 of the order of Ld. CIT(A). In the submission, assessee submitted that search conducted in case of Shah Veerchand Govindji Jewellers Pvt. Ltd. During search, from the possession of Ketan R Shah, Director of said company, some details was found from the mobile back-up data. The data papers include the alleged transaction for purchase of the land. The paper printed from data was related to purchase of land on behalf of Mahavir Jain International School. The statement of Ketan R Shah was recorded. The assessee-trust referred to the questions and answers of Ketan Shah. The questions No.12 to 18 of statement was referred in the submission, content of such documents as mentioned on pages 4-5 of the order of Ld. CIT(A). In answer to question No.12, Ketan R Shah stated that this note was written by trustee of their school ‘Shri Mahavir Jain International Public School’ and was written by Shri Babubhai Mehta and it was stated that they were thinking about opening another branch of their school and for that purpose looking for it and so that estimate of some land was prepared. They have not brought that land and for this no payment was made. Apart from that, it was also written that how much donation is likely to be received from such society and public. In reply to question No.13, regarding that where is the land and who was the owner. In answer to that question, he replied that he does not know anything about where the land was located and who was the owner. In question No.14, it was asked that as to how much was paid for this land and what was the means of that payment. In reply to said question he replied that they have not made any payment for this, since 5

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust we have not bought any land. In question No.15 about the area 17 vighas of land @ 53 lakhs / vighas at the rate of Rs.9.01 crores, out of which Rs.1.40 crores through cheque and Rs.7.61 crores in cash is to be given and that on the same page, it was written “Rs.5.60 crores cash given, Rs.1.40 crores cheques given, Rs.2.00 crores cash outstanding”. The person replied that this is all possibility which we were working out to buy this land and in reality this purchase did not happen. This is the some working. The assessee by referring all the questions stated that it was merely on estimate of some land, which was not ultimately purchased. The assessee further stated that such paper was written by Babubhai Bhikhabhai Mehta and that the land mentioned on the paper was never purchased by assessee-trust. It was just a proposal by one of the trustee to purchase huge immovable property to construct a new school building of international standard and hostel and such proposal was dropped subsequently. No such payment by cheque of Rs.1.40 crores or Rs.2 crores was ever paid as mentioned in the said paper. Further no such 9 vighas of land was ever purchased by assessee-trust. Such papers were contained of Rs.5.06 crores in cash. It was just mentioned that cash was to be paid. From the perusal of audited accounts, it can be seen that no land was purchased by assessee-trust. Further audited accounts of new addition on account of new building at Rs.40,80,644/- as reflected and this building was constructed on the land belonging to other persons, which was not subsequently purchased after three years. The Assessing Officer has not brought on record the particular investment made by assessee-trust, for which addition was 6

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust made. There is no reference in the seized papers that assessee-trust has given money in cash. In various questions asked during the course of statement recorded under section 131, Ketan R Shah clearly stated that he do not know about where the land was located and who was the owner of that land. The assessee-trust contended that seized paper was unsigned without any name of actual owner / seller of the assessee or advance of the property. It should be treated dumb document, particularly when Assessing Officer could not correlate the figure of the said document with actual agreement of sale deed. To support assessee’s submission, the assessee relied on the judgment of Hon’ble jurisdictional High Court in the case of CIT vs. Maulik Kumar K. Shah 307IETR 137 (Guj), wherein it was held that loose papers containing rough estimates cannot be relied upon to make addition on account of undisclosed income in absence of any independent evidence. The assessee also relied on various other case law including co-ordinate Benches of ITAT Ahmedabad in the case of DCIT Vs Haresh R Vasani in IT(SS)A No.580/AHD/2010 for A.Y 2005-06 dated 04.04.2014. 5. The assessee further explained that Assessing Officer has not invoked the provision of under section 132(4A) and Section 292C, as no search or survey proceedings were conducted in case of assessee. Even otherwise, such provision is no application as evidence in the form of digital data recovered from the mobile data of Ketan R Shah, who did not refer the name of assessee. To support such payment, the assessee relied on various case law:  CIT vs. Anil Khandewal 93 CCH 0042 (Del) 7

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust  CIT vs. S.M.S. Investment Corpn. Pvt. Ltd. 207 ITR 364 (Raj)  Straptex India Pvt. Ltd. vs. DCIT 84 ITD 320 (Mum. Trib.)  Rama Traders vs. First ITO 25 ITO 599 (Pat.Trib.) (TM)  Asst. CIT vs. Kishore Lal Balwani Rai 17 SOT 380 (Chd.Trib.)  Sheth Akshay Pushpavadan vs. DCIT 130 TTJ 42 (Ahd. Trib) 6. On the basis of such submission, the assessee submitted that addition made by Assessing Officer is not valid, as the same are based on incriminating material fact recovered from a third person which could not impose liability upon the assessee unless there is a corroborative evidence found in the case of the assessee. To support such view, the relevant following decisions are as follows:  CIT vs. P.V. Kalyansundaram 294 ITR 49 (SC)  CIT vs. Anil Khandelwal 93 CCH 0042 (Del)  CIT vs. S.M.S. Investment Corpn. Pvt. Ltd. 207 ITR 364 (Raj)  CIT vs. Kantibhai Revidas Patel 42 taxmann.com 128 (Guj)  ACIT vs. Lata Mangeshkar 97 ITR 696 (Bom)  Straptex India Pvt. Ltd. vs. DCIT 84 ITD 320 (Mum. Trib)  Rama Trades vs. ITO 25 ITO 599 (Pat. Trib) TM  ACIT vs. Kishore Lal Balwani Rai 17 SOT 380 (Chd.Trib.)  Sheth Akshay Pushpavadan vs. DCIT 13 TTJ 42 (Ahd.Trib) 7. The Ld. CIT(A) after considering the assessment order, submission of assessee and the other materials placed before him, held that basic submission of assessee is that they were intending to purchase 17 vighas of land for starting a new school building in and around Valsad for which new trustees were to be admitted that assessee could not get the required number of donors. Even the images found also do not specify that the cash mentioned has bene paid by the assessee as there are no dates mentioned. For such expenses in buying land and who

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust could come in as trustees and donate for the land was being planned. The assessee could not purchase said 17 vighas of land for the reasons that assessee could not get required number of donors. The assessee also stated that incriminating seized papers do not specify a particular plot of land or the name of the seller even the images found also do not specify such cash mentioned has been brought by assessee. There is no reference of date, even Ketan R Shah, whose mobile the data images were retrieved stated before the DDIT, in his statement under section 131 the loose papers related to propose expenses for acquiring land of new school which was not materialized. The Ld. CIT(A) also noted that image do not mention that cash amount written therein was actually paid as there was no such payment the land in question was not purchased by assessee, which goes to prove that proposal of 17 vighas of land was not actually materialized. The Assessing Officer has referred the advance given by assessee in financial year 2018-19 to Rajendra Hirachand Shah and that advance was mentioned in the incriminating material. The assessee explained that such advance was given for a different piece of land admeasuring 3 vighas at Chanvai in Valsad Taluka on which a school building had already been constructed and for which first advance of Rs.20.00 lakh was given on 26.04.2019 to Rajendra Hirachand Shah and Champaklal Mehta. The said land was registered in financial year 2021-22. Therefore, such advance by assessee as appearing in its books of account for different land of 3 vighas, which was not part of land mentioned in the seized incriminating material, which was specifically mentioned that said land was 17 vighas. 9

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust The Ld. CIT(A) noted that on the basis of aforesaid facts, it was clear that incriminating image found from the mobile phone back-up of Ketan R Shah was related to land admeasuring 17 vighas, which was never purchased by assessee. Ld CIT(A) noted that nottings found in the image do not conclusively proved that Rs.5.06 crores was paid by the assessee to any other party for purchase of land as there was no mentioned of name of recipient, no date or no signature of recipient mentioned therein. The case law relied by assessee are applicable on the facts of the present case. Therefore, the image found are more in nature of nottings written to plan for purchasing the land and sources to fund such purchase. Hence, the addition made by Assessing Officer under section 69B of the Act for unexplained investment in the land cannot be sustained in absence of corroborative evidence. The land was never purchased nor such cash mentioned in the images was ever paid to anybody. On such observation, the Ld. CIT(A) deleted the entire addition made by Assessing Officer. Aggrieved by the order of Ld. CIT(A) the Revenue has filed present appeal before the Tribunal. 8. We have heard the submissions of Ld. Commissioner-of Income Tax Departmental-Representative (Ld. CIT-DR) for the Revenue and the learned authorised representative (Ld.AR) for the assessee. The ld Sr-DR for the Revenue supported the order of Assessing Officer and submits that during the search action, incriminating material recovered from the mobile of Ketan R Shah, Director of Shah Veerchand Govindji Jewellers Pvt. Ltd., was found the incriminating material found from his mobile back-up data clearly indicates that assessee-trust was involved in 10

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust purchase of property for set up of its new school and payment of huge unaccounted money of Rs.5.60 crores for that purpose. The area of land of land is clearly mentioned of such incriminating seized material. Before Ld. CIT(A) the assessee took the plea that it was merely an estimation fact or proposal for purchasing of land for inviting more trustee and it was not materialised such contention of assessee is not plausible because the seized materials also contain the reference of construction of school rooms, purchase of wooden benches and school related materials. The assessee has not furnished any evidence that such advance was not paid or the land purchased by assessee is not the same land. The Ld. CIT(A) accepted the story of assessee and deleted the entire addition. The decision of Ld. CIT(A) is not acceptable as he just concluded and seized paper was mere estimation for other project, which was to be materialized by inviting more trustees. The Ld. CIT-DR for the Revenue prayed for reversing the order of Ld. CIT(A) and to make restore the addition made by the Assessing Officer. 9. On the other hand, Ld. AR for the assessee supported the order of Ld. CIT(A) and submits that search action was carried out on 21.02.2018 on Shah Veerchand Govindji Jewellers Pvt. Ltd. During search action, the statement of Ketan R Shah was recorded under section 131. In the statement, Ketan R Shah particularly in response to question Nos.12 and 13 specially replied that he is not aware about the location and ownership of the said land respectively. In response to question No.12 he replied that they have not made any payment as the land was not purchased. The assessee-trust has purchased land admeasuring 3 11

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust vighas of land on 21.06.2021, copy of sale deed of such land was filed at page No.74 to 101 of paper book. The Ld. AR for the assessee submits that neither the statement of Ketan R Shah nor incriminating materials suggest that any unaccounted payment was made by assessee-trust for purchasing of land. Ketan R Shah is not the trustee of assessee-trust. The Ld. AR for the assessee submits that Assessing Officer has not made any independent investigation and not brought any adverse evidence on record to justify the addition. Neither the survey nor search action was carried out on the premises of assessee nor the Assessing Officer invoked the provision of Section 132(4A). Ketan R Shah is a third person, and any evidence recovered from third person cannot be basis for such additions. The assessing officer has not made any investigation to corroborate seized material, so no addition is sustainable against the assessee. Neither the assessee has purchased such land nor any statement of seller was recorded the seized materialised otherwise does not contain the name of assessee-trust or signature of any of the assessee. It was merely a proposal, which was ultimately not materialise no addition could be made as has been held by Ld. CIT(A). The Ld.AR for the assessee submits that he relied upon all the case law filed before Ld. CIT(A) are as follows:  DCIT vs. R.P. Import and Export Pvt. Ltd. (2015) 381 ITR 436 (Chd.Trib.)  CIT vs. D.K. Gupta (2008) 174 TAXMAN 476 (Del)  CIT vs. Maulik Kumar K. Shah 307 ITER 137 (Guj)  Prathana Constructions (P.) Ltd. vs. DCIT (1999) 18 CCH 319 (Ahd-Trib)  Nishant Constructions Pvtd. Ld. Vs. DCIT (2019) 57 CCH 83 (Ahd-Trib.)  ITO vs. Chiraayu Estate & Development (P.) Ltd. [ITA No.263/Mum/2010 dated 24.08.2011] (Mum-Trib.) 12

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust  Ashwani Kumar vs. ITO 39 ITD 183 (Del-Trib.)  Amarjit Singh Bakshi (HUF) vs. ACIT [2003] 86 ITD 13 (Del) (TM)  Shri Neeraj Goel vs. ACIT [ITA No.5951/Del/2017 dated 21.03.2018 (Del- Trib.)  Avinash Vijaykumar Khemani vs. DCIT [ITA No.88-89/.SRT/2022 dated 23.12.2022] (Surat-Trib.) 10. We have considered the rival submissions of both the parties and have gone through the order of lower authorities carefully. We have also deliberated on the various case laws relied before lower authorities as well as by ld AR for the assessee before us. We find that during assessment, Assessing Officer made addition on the basis of seized materials recovered from the mobile back-up data of Ketan R Shah, Director of Shah Veerchand Govindji Jewellers Pvt. Ltd., where under section 132 was carried out on 21.02.2018. We further find that the person from whose possession such incriminating material was recovered, has categorically shows his ignorance about the purchase of land or have not accepted that any amount as mentioned in the seized material was actually paid to the seller of land. The Assessing Officer has not made any investigation and without verifying the fact that, if the land was actually purchased or not, made the addition of the cash component mentioned in the seized material. It is an act of common knowledge that on-money was paid only when any agreement of purchase and the land or asset which was actually materialized when such agreement or proposal was not in fact materials, there cannot be any occasion for payment of such on-money in air. 11. We find that before Ld. CIT(A) assessee has submitted detailed written submission, which we have already recorded above in the body of this 13

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust order are not repeated for the sake of brevity. We find that Ld. CIT(A) on appreciation of submissions and the nature of incriminating material seized held that the land in question mentioned on the seized paper was never purchased by assessee-trust and such fact clearly goes to prove that recording on the seized material was never materialized. The assessee has purchased different piece of land having area of 3 vighas only, at the different sale price. The advance given by assessee appearing in the books of assessee is for a different land and not a part of said land mentioned in the seized incriminating material. The Ld.CIT(A) also noted that there is no reference or mentioned any name of seller or recipient of on-money and there is no date or signature of any recipient of on- money and the noting does not conclusively prove that Rs.5.60 crores was paid by the assessee. 12. We are conscious of the fact that additions in the present case is based on search action, therefore, we independently examined all the facts. It is admitted the fact that no verification of fact about the noting on the seized material was carried out by the Assessing Officer. It is also admitted fact that the statement of Ketan R Shah, nowhere support the Assessing Officer for making such addition. No statement of purchaser / seller was recorded who has ultimately sold 3 vighas of land, whether said seller was from the same Revenue Survey number of the different persons. It is also admitted fact that no such survey was carried out at the premises of the assessee. No satisfaction as required under Section 153C was recovered by Assessing Officer. Further it is not a case covered by the provisions of section 132(4A). The Assessing Officer simply 14

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust presumed on the basis of noting on the seized material that payment of unaccounted money for purchased of land was made by assessee, without verifying the fact that whether the same land was purchased by assessee or not and seized materials does not contain the name of party or signature. We further find that the amount of impugned addition was not recorded in the book of assessee, rather the assessee has given clear explanation during the assessment about the noting found from the possession of third party. 13. We find that Hon’ble jurisdictional High Court in the case of Maulik Kumar K Shah (supra) held that mere entry in the seized materials are not sufficient to prove that assessee was indulging such transaction in which on-money has been received. The Co-ordinate Benches of Chandigarh Tribunal in the case of DCIT vs. R.P. Import and Export Pvt. Ltd. in ITA No.1135/Chd/2013 dated 12.12.2014 also held that when no evidence was found during search action, if any considerations have been paid in respect of any property and no adverse material was found against the assessee to justify unaccounted investment and the agreement in question was cancelled document did not relate to assessee directly or indirectly. It was held that the Assessing Officer has merely inferred that assessee might have paid more consideration over and above what was stated in the document. It was merely on suspicious of Assessing Officer to make addition against the assessee. 14. We find that case in hand is on better footing, in the present case the Assessing Officer has not brought any evidence that the land, the details in the form of area and locality mentioned in the seized papers was 15

ITA No.208/SRT/2023 (A.Y 18-19) Mahavir Jain Charitable Trust ultimately purchased or not, when the assessee specifically contended that it was just a proposal to invite more trustees and was not ultimately materialized, no addition could be made against the assessee. On the above aforesaid additional observation, we confirm the order of Ld. CIT(A). No contrary facts or law is brought to our notice to take other view. In the result, the grounds of Revenue’s appeal are dismissed. 15. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 18/10/2023. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) [लेखा सद�/ACCOUNTANT MEMBER] [�ाियक सद� JUDICIAL MEMBER] Surat, Dated: 18/10/2023 Dkp. Out Sourcing Sr.P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT 4. DR 5. Guard File True copy/ // True Copy // Sr. Private Secretary /Private Secretary /Assistant Registrar, ITAT, Surat

e copy/