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Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI MANISH AGARWAL
(ASSESSMENT YEAR 2009-10) Mr. Ashish Kalra ACIT, C-3/313, MIG Flats, Janakpuri, Central Circle-4, New Delhi-110058. Vs. New Delhi. PAN-AIPPK0526N (Appellant) (Respondent) Assessee by Shri Tarandeep Singh, Adv. Department by Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing 16/07/2025 Date of Pronouncement 14/10/2025 O R D E R PER MANISH AGARWAL, AM: These two appeals are filed by the assessee against the common order of Ld. Commissioner of Income Tax (Appeals)-23, New Delhi [CIT(A), in short] dated 28.01.2019 in Appeal No. 159/2016-17 and 3/2017-18 for Asst. Years 2008-09 and 2009-10 respectively, both arising out of order passed u/s 147 r.w.s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’).
Since, both the appeals are having identical issues, therefore, they are adjudicated by a common order. First we take up the appeal for Assessment Year 2008-09 in .
Brief facts of the case are that assessee is an individual and is teaching assistant taking professional classes for CA students. The return of income was filed on 30.09.2008 declaring total income of Rs.1,38,26,350/-. A search and seizure operations was carried out at the business premises of M/s Bright Group of companies who was running one institute, namely M/s Bright Professional Pvt. Ltd. where the assessee was attached as one of the faculty members. As a result of search, the M/s Bright Group filed the petition before the Hon’ble Settlement Commission wherein it had claimed that payments were made in cash to various individuals including the assessee towards the professional charges for teaching assignment. As per the same a sum of Rs.1,20,41,540/- for Assessment Year 2008-09 and of Rs.2,20,660/- for Assessment Year 2009-10 was paid to the assessee in cash. The AO based on such information recorded the reasons and initiated the reassessment proceedings u/s 147 of the Act in the case of assessee and issue notice u/s 148 after obtaining approval from the competent authorities. In reply, the assessee filed return of income wherein the income as shown in the return field u/s 139(1) was declared. The reasons so recorded were supplied and they were objected, and the AO passed the order disposing the objections. Thereafter, the reassessment order was passed wherein the additions of Rs.1,20,41,540/- was made by alleging the same as undisclosed the income received in cash from M/s Bright Professional Pvt. Ltd. as professional fee for teaching.
Against the said order, the assessee has preferred an appeal before the Ld. CIT(A) who vide impugned order dated 28.01.2019 confirmed the additions made by the AO and further enhanced the income of the assessee by a sum of Rs.5,00,000/- being received through cheque from M/s Bright Professional Pvt. Ltd. by holding the same as additional undisclosed receipt.
Aggrieved by the said orders, the assessee is in appeal before the Tribunal wherein the following grounds of appeal were taken by the assessee. “1 That on facts and in law the orders passed by the Commissioner of Income Tax (Appeals) (hereinafter referred to as "the CIT(A)") and the Assessing Officer (hereinafter referred to as "the AO") are bad in law and void-ab-initio.
2. That on facts and in law the CIT(A) has erred in upholding assumption of jurisdiction to re-assess u/s 147 of the Act by issuance of notice u/s 148. 2.1 That on facts and in law the CIT(A) has erred in not appreciating that in absence of tangible material assumption of jurisdiction u/s 148 is bad in law.
3. That on facts and in law the CIT(A) has erred in not appreciating that the action of AO in not issuing notice u/s 153C r.w 153A but proceeding to reopen by issuing notice u/s 148 renders the order passed by AO as bad in law and void ab initio.
4. That, without prejudice, on facts and in law the CIT(A) erred in violating principles of natural justice rendering the impugned order void in law. 4.1 That on facts and in law the CIT(A) erred in drawing conclusions premised upon material/information not confronted to the appellant.
5. That on facts and in law the CIT(A) erred in arbitrarily and illegally assuming the power to enhance u/s 251.
6. That on facts and in law the CIT(A) has erred in not admitting application (filed on 24th November 2016) seeking admission of additional ground of appeal.
7. That on facts and in law the CIT(A) has erred in not admitting application dated 14th November 2017 seeking admission of Addition Evidence as per provisions of Rule 46A of Income Tax Rules 1962. 7.1 That on facts and in law the CIT(A) erred in holding that evidences filed along with Rule 46A application are an afterthought. 7.2 That on facts and in law the CIT(A) erred in not appreciating that evidences produced along with Rule 46A application were relevant to adjudication of issue in dispute
8. That on facts and in law the CIT(A) has erred in not passing a separate speaking order rejecting applications seeking admission of Additional Ground and Additional Evidences.
9. That on facts and in law the CIT(A) erred in upholding addition to total income of Rs1,20,41,540/- on account of alleged cash receipts.
& 4309/Del/2019 Ashish Kalra vs. ACIT 9.1 That on facts and in law the CIT(A) has erred in upholding that appellant had received cash from M/s Bright Professional Private Limited as remuneration / share in revenue for coaching classes conducted there.
That on facts and in law the CIT(A) has erred in directing enhancement to total assessed total income by Rs. 5,00,000/-.
That on facts and in law the CIT(A) has erred in denying appellant opportunity to raise relevant interrogatories during the course of cross-examination of Mr. Sanjeev Kumar Gupta on 28th November 2017.
12. That on facts and in law, the CIT(A) has grossly erred in factually holding that: (a) The appellant was granted opportunity to be present at the time of recording of statement of Mr. Sanjeev Kumar Gupta on 23rd October 2017 by CIT(A) (b) Words "Kalra", "Kalra ji", "Ashish Kalra" in Annexure A-29 and A-30 of documents seized from premises of M/s Bright Professional Private Limited are references to appellant. (c) The records maintained by M/s Bright Professional Private Limited contained entries reflecting cash payments to the appellant. (d) Sum of Rs. 5,00,000/- received by appellant from M/s Bright Professional Private Limited vide cheque no. 947951 are taxable as professional receipts. 12.1 That the factual errors in order of CIT(A) vitiates the conclusions arrived at on facts and in law. 13 That on facts and in law the CIT(A) has erred in: (i) upholding additions by relying upon orders passed Income Tax Settlement Commission (ITSC) in case of M/s Bright Professional Private Limited and Mr. Munish Bhandari. (ii) upholding additions by relying upon affidavits of Mr.Manoj Batra and Mr. Gautam Sethi. (iii) observing that Mr. Manoj Batra and Mr. Gautam Sethi have also accepted receiving payments in cash from M/s Bright Professional Private Limited. (iv) holding that as a witness Mr. Sanjeev Kumar Gupta was not required to prove averments made by him against the appellant. (v) not appreciating that sum of Rs 5,00,000/- received by appellant vide cheque no. 947951 was a loan advanced by M/s Bright Professional Private Limited. (vi) not appreciating that search documents recovered from premises of M/s Bright Group cannot be used against the appellant.
14. Without prejudice on facts and in law the CIT(A) has erred in not allowing deduction for estimated expenses.
15. That on facts and in law the CIT(A) has erred in following appellate orders for earlier assessment years.
& 4309/Del/2019 Ashish Kalra vs. ACIT That the appellant prays for leave to add, alter, amend and/or vary the ground(s) of appeal at or before the time of hearing.” 6. During the course of hearing, the assessee has further taken two additional grounds of appeal which reads as under: “Ground No.8 The Ld. AO has erred in law and on facts in not providing an opportunity of cross examination with representative of M/S Bright Professionals Pvt Ltd. The Ld. AO did not give an opportunity to correct or otherwise of the report to be tested, there is a clear violation of the principles of natural justice committed by him in relying upon the statement to the detriment of the assessee. Ground No.
9. The Ld. AO has erred in law and on facts in making an addition of Rs. 1,20,41,540/- being undisclosed income on the basis of material seized and found from the possession and control of a third party namely M/S Bright Professionals Pvt Ltd on the basis of irrelevant observation and findings based on decisions which are not applicable to the appellant's case. while ignoring the decisions cited by the appellant which were squarely applicable to the facts of the appellant's case in view of the facts and elaborate submissions filed coupled with legal position in support thereof. the impugned addition of Rs. 1,20,41,540/- requires to be deleted.”
7. Grounds of appeal No.1 is general in nature.
Grounds of appeal
No.2 to 2.1 are with respect to the initiation of provisions u/s 147 of the Act by issued of notice u/s 148 of the Act. Before us, the Ld. AR of the assessee submits that the sole basis initiation of proceedings is the seized material titled as Annexure-A-29 and A-30 wherein huge payments in cash was recorded. The AR submits that neither in any of the paper of such Annexures nor in the statements recorded u/s 132(4) of Mr. Rashid Masood who is one of the Director of M/s Bright Professional Pvt. Ltd., the name of the assessee was found noted/stated, however, as per Ld. AR in subsequent investigation proceedings carried out, it was stated by the representatives of M/s Bright Group that the word “Kalra Ji” mentioned in Annexure-A-29 and A-30 is for the assessee. The Ld. AR submits that it is a trite law that a Revenue cannot supplement fresh reason for reopening of assessment by relying upon any further material not forming part of the reasons recorded which & 4309/Del/2019 Ashish Kalra vs. ACIT could be read as itself. For this he placed reliance on the judgment of the Hon’ble Madras High Court in the case of Apollo Hospitals Enterprise 157 Taxman 289 (Mad). The Ld. AR further submits that there should be a live link between the material found which is not present in the case, therefore, the action taken for reopening the assessment deserves to be held to bad in law. He further submits a written submission in this regard which reads as under:
1. No Tangible Material with AO justifying assumption of jurisdiction u/s 147 of the Act- In this case the basis for assumption of jurisdiction u/s 147 of the Act is a search conducted by the Income tax department in case of M/s Bright Group of cases on 25-11-2010. Reasons recorded are premised upon search conducted on 25-11-2010 in case of M/s Bright Group of cases. Copy of reasons recorded by AO u/s 148(2) of the Act is at pages 2 and 3 of AO order. Reasons recorded rely upon "seized material contained in Annexure A-29 and A- 30", Premised this piece of evidence it is alleged in the reasons that "huge payments have been made to various persons in cash". Search material available with AO while issuing notice u/s 148 (shared by the AO with 'A') comprises of: (a) Annexures A-29 and A-30……. copy enclosed at pages 5-13 of PB. (b) Copy of statement recorded u/s 132(4) of Mr. Rashid Masood who was a Director in M/s Bright Professional Pvt. Ltd. and M/s Bright Star Air Travel Pvt. Ltd. Copy of his statement is enclosed at pages 14 to 26 of the PB. Only material stated in point (a) above has been referred to in reasons recorded u/s 148(2). However, on a conjoint reading of both the above documents it is evident that name of 'A' is nowhere mentioned therein. There is no tangible material available with the AO which could justify assumption of jurisdiction u/s 148 of the Act. It is submitted that: (i) Annexures A-29 & A-30 are a summary of some rough cash books seized from premises of M/s Bright information depicted therein is too general. These annexures refer to someone "Kalraji". The summary prepared by search party in Annexures A-29 and A-30 are very much vague in as muchas there are no details like why cash is paid and to which "Kalraj". These annexures were seized from M/s Bright and are not even made by or handwritten by the 'A'. (ii) Specifically kind attention is invited to pages 18 to 23, Q12 to Q14 of PB-Mr Massod has in his staternent not named the 'A' but has named some other people as part of faculty in M/s Bright. Mr Massod also confirms that there are no cash receipts maintained by them (refer Q14). This is a statement recorded during search u/s 132(4) of the Act and is therefore relevant evidence to check whether assumption of jurisdiction u/s 148 is justified.
& 4309/Del/2019 Ashish Kalra vs. ACIT 1.1 It is also now well settled that there must necessarily be a live link between the material and the belief (reference Lakhmani Mewal Das 103 ITR 437 (SC)). When action u/s 148 was taken, AO had in his possession only the above 2 documents. From information available with the AO from these two documents it cannot be said that the AO has in his possession some "tangible material" which has either a "live link" or "proximate link" or "rationale connection" or even a "relevant bearing" to a fact that it was the income of the 'A' which has escaped assessment. In support of this proposition kind reference is invited to the following judicial pronouncements: United Electric Co. 258 ITR 317(Del) copy at pages 354 to 361 of PB relevant at pages 358 to 360 of PB. In this case to the statement forming basis of reopening was too general not naming the assessee (refer page 360 of PB, paras E & F). Amsa India Pvt. Limited 393 ITR 157(Del) copy enclosed at pages 362 to 366 of PB relevant at pages 365 and 366, para 5. Atul Jain 212 CTR 42(Del) copy at pages 369 to 371 of PB relevant at pages 370 and 371, para 17.
2. Therefore, before issuing notice u/s 148 dated 02-03-2015 the AO should have conducted more enquiry/investigation for formation of a belief that information depicted in Annexure A-29 and A-30 refer to 'A' only and no one else. Before issuing notice u/s 148 did AO enquire from M/s Bright, answer is No. AO thus had no relevant / tangible material. Here it is relevant to take note of decision of Hon'ble Delhi High Court in case of SM Aggarwal reported in 293 ITR 43(Del) - copy enclosed at pages 418 to 423 of PB. In this case it is held by High Court as under: "It is well-settled that the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. So, unless and until the contents of the document are proved against a person, the possession of the document or hand writing of that person, on such document by itself cannot prove the contents of the document......" It is precisely for this very reason that during first appellate proceedings CIT(A) felt need to conduct further enquiry/Investigation u/s 250(4) of the Act (refer page 27, para 3.4 of CIT(A) order).
3. Reasons recorded cannot be supplemented and are to be read as such - 'A' acknowledges that in subsequent investigations conducted by the CIT(A) representatives of M/s Bright Group have further alleged that words "Kalra ji" mentioned in Annexures A- 29 and A-30 refer to the 'A'. However, this further information was never available with AO while initiating action u/s 148. It is trite law now that revenue cannot supplement fresh reasons (for reopening assessment) in shape of counter affidavit or otherwise or by relying upon any further material not forming part of reasons recorded. Reasons recorded are to be read as it is. Material obtained post recording of reasons cannot be used to validate reopening. Refer:
NDTV reported in 424 ITR 607(SC) - copy enclosed at pages 377 to 400 of PB relevant at pages 398-399. Abha Gupta reported in (2025) 173 taxmann.com 834(Del) - copy enclosed at pages 412 to 417 of PB relevant at page 416 of PB, para 11 4. ITSC order dated 30-05-2014 (copy enclosed at pages 115 to 132 of the PB) in case of M/s Bright Group and dated 30-05-2014 in case of Mr. Munish Bhadari are also not relevant It is submitted that ITSC order is dated 30-05-2014 and notice u/s 148 issued by the AO in the present case is dated 02-03-2015. AO therefore had in his possession ITSC order but he does not refer to this in the reasons recorded u/s 148(2) of the Act. He however refers to this order in the assessment order at page 3, 2nd last para. It is stated that ITSC in its order has not recorded any details of undisclosed expenses of Rs.17.68 crore (refer page 120 of PB) which are claimed to have been incurred by M/s Bright Professionals. In the entire ITSC order there is no specific information / materialpertaining to the 'A'. In fact, ITSC has not named your 'A'. ITSC orders are binding only for M/s Bright Professionals and Mr Munish Bhandari. In absence of any corroborative material / evidence above ITSC orders cannot be made a benchmark which is blindly applicable across the board. Kind reference in this regard is invited to the decision of PG Foils Limited reported in 302 ITR 331(Mad) copy enclosed at pages 372 to 376 of PB, wherein it is held by High Court as under: "In the instant case, as rightly pointed out by the learned counsel for the appellant the proceedings of the Settlement Commission dated October 28, 2002, is binding only on M/s. Mohan Aluminium (P) Ltd. (MAL) and not on the appellant. While disposing the case of MAL, the Settlement Commission, based on the statement obtained from one V. Jagadisan, chartered accountant who appeared on behalf of MAL and other materials placed before it was constrained to make certain observations with reference to the transactions between MAL and the appellant/writ petitioner/ assessee. Those materials, in our considered opinion, can definitely be a reason for reopening the assessment in respect of the appellant/writ petitioner/assessee. But the said reason by itself cannot be a conclusive proof for reopening the assessment in the absence of any explanation or objections by the appellant/writ petitioner/assessee. Therefore, suffice it to give liberty to the appellant/writ petitioner/ assessee to submit his objections to the notices issued under section 148 of the Act, reopening the assessment for the assessment years 1995-96 and 1996-97 and to the observations made against the appellant/writ petitioner/assessee in the proceedings of the Settlement Commission dated October 28, 2002, in the matter of MAL, as the said observations would not automatically bind on the appellant/writ petitioner/assessee. On receipt of such objections, the assessing authority is directed to consider the same and dispose of the matter on the merits, without being influenced by any of the observations made by the Settlement Commission in the proceedings dated October 28, 2002, in the case of MAL"
9. On the other hand, the Sr. DR supported the order of the lower authorities and submits that the Ld. CIT(A) has dealt the issue in detail in para 6.2 of the order wherein after considering all the aspects, the Ld. CIT(A) has held the reopening as valid. Thus relying upon such observations, he prayed for dismissal of the grounds taken by the assessee in this regard.
10. Heard both the parties and perused the materials available on record. In the instant case, there was some loose papers/documents were found and seized during the course of search titled as Annexure A29 and A-30. These annexures contained the details of cash payments made to various persons and it was explained that the said entries related to the payments in cash to the teaching faculties including the assessee. The AO alleged that the entries recorded under the title as “Kalra Ji” belonged to assessee and therefore case of the assessee was reopened u/s 147 of the Act. The Ld. CIT(A) considered these facts while confirming the reopening of assessment. The relevant observations of ld. CIT(A) as contained in para 6.1 to 6.5 of the order are as under: “6.1. Vide ground Nos, 3 and 4, the appellant has objected to initiation of proceedings u/s 147/148. The AR argued that the AO reopened the assessment based on unreliable material, the reasons recorded are not reasons to believe" but these are "reasons to suspect and the AO did not apply his mind. 6.2 It is clear from the perusal of the reasons recorded that the AO had material in form of the entries in the seized documents (Annexure A-29 and A-30) indicating that the cash payments reflected by the entries of out-going cash written in the seized documents (seized during the search & seizure operation in case of M/s Bright Professional Private Limited group) were made as remuneration / share in revenue earned because of the appellant teaching the CA students through the platform of M/s Bright Professional Pvt. Ltd. The AO noted that the entries in the seized material (which were in form of cash books / registers) were reflecting cash payments which were mostly to the individuals being faculty members who took teaching assignments for (CA) students enrolled by M/s Bright Professional Pvt. Ltd. The appellant was also such a faculty member and there were entries in the seized material showing cash payments to the appellant. The AO also & 4309/Del/2019 Ashish Kalra vs. ACIT analyzed the return filed by the appellant and the information submitted during the assessment proceedings which culminated in passing of the assessment order dt. 22.11.2010 u/s 143(3). The AD found that the cash payments reflected by the entries in the seized material amounted to Rs. 1,20,41,540/- and were not disclosed by the appellant in his books of accounts. The AO also noted that it was appellant who failed to disclose fully and truly all the material facts necessary for his assessment for the relevant assessment year (AY 2008-09). 6.3 Therefore, I find that there was reliable material on record to which the AO applied his mind and reached a logical conclusion that income had escaped assessment because of the failure of the appellant to disclose fully and truly all the material facts necessary for his assessment for the relevant assessment year (AY 2008-09). Certainly, the AO had reasons to believe (and in no case there were reasons to suspect) This situation is aptly explained by Hon'ble Gauhati High Court while delivering the judgment in the case of Sh. Anant Kumar Saharia Vs. 533(Gauhati) Hon'ble court has held as follows (page 539): "The belief is that of the Assessing Officer and the reliability or credibility or for that matter the weight that was attached to the materials naturally, depends on the judgment of the Assessing Officer. This court in exercise of power under article 226 of the Constitution of India cannot go into the sufficiency or adequacy of the materials. After all the Assessing Officer alone is entrusted to administer the impugned Act and if there is prima facie material at the disposal of the Assessing Officer that the income chargeable to income-tax escaped assessment this court in exercise of power under article 226 of the Constitution of India should refrain from exercising the power. In the instant also, the case of the petitioner was fairly considered and thereafter the above decision is taken." (emphasis supplied). 6.4 In the context of section 147, Hon'ble Supreme Court while delivering judgment in the case of Raymond Woollen Mills Ltd Vs. Income-Tax Officer And Others [1999] 236 ITR 34 (SC) laid down a ratio that the sufficiency or correctness of the material is not a thing to be considered by the courts. This vie view is reaffirmed by Hon'ble.SC, in case of Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers Pvt. 291 ITR 500(SC). The Hon'ble SC has stated as under: "This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. (1996 (217) ITR 597 (SC)) Raymond Woollen Mills Lid. v. ITO 1999 (236) ITR 34 (SC)] 6.5 Surprisingly, the AR did not relied upon the objections raised by the appellant (vide letter dated 14:07.2015-after receiving a copy of reasons recorded) and the order passed by the AD disposing them off (vide letter dt. 21:07 2015) (during the re-assessment proceedings). It seems that the ARs wanted to play a second innings and try their luck (again) and did not build-up his case upon & 4309/Del/2019 Ashish Kalra vs. ACIT these documents. In other words, the appellant did not find any fault in the action of the AO in terms of disposing the objections (raised vide letter dt. 14.07.2015) off vide letter dt.21.07.2015. 6.6 In view of the above discussion, these grounds (Nos. 3 and 4) of appeal are dismissed.”
11. Before us, the Ld. AR has reiterated the same arguments which were made before the ld. CIT(A) and no fresh arguments/materials was placed before us in support of the arguments. In view of these facts, we find no error in the order of Ld. CIT(A) in confirming the reopening of the assessment which action is hereby upheld. Accordingly, ground of appeal No.2 to 2.1 of the assessee are dismissed.
Ground of appeal No.3 of the assesse is with respect to the initiation of proceedings u/s 148 and not u/s 153C r.w.s. 153A of the Act as the material found during the course of search in the case of 3rd person was made the sole basis for reopening the assessment of the assessee. Admittedly, this ground of appeal is decided against the assessee by the Hon’ble Delhi High Court in the case of PCIT vs. Navin Kumar Gupta reported in [2024] 168 taxman.com 574 (Del.) wherein the Hon’ble Jurisdiction High Court has held that the AO initiated the reassessment proceedings u/s 147 even if the proceedings u/s 153C could be initiated. Therefore, in the light of above judgment, we hereby held that the action of the AO in reopening the assessment u/s 147 on the basis of the documents found from the possession of the 3rd person cannot be held as bad in law and, accordingly, the ground of appeal No.3 of the assessee is dismissed.
13. Ground No.4 to 9, 11 to 13 are with respect to the addition of Rs.1,20,41,540/- made on account of alleged cash receipts as undisclosed income of the assessee. Ground No. 10 and 13 (v) are with respect to the enhancing of the income on account of alleged undisclosed receipts. Since, all these grounds are pertaining to the issue & 4309/Del/2019 Ashish Kalra vs. ACIT of alleged undisclosed cash/cheques receipts, therefore, they are taken together for consideration.
Before us, Ld. AR of the assessee submits that during the course of search documents found Annexure A-29 and A-30 do not contain the name of the assessee. In the preliminary statement recorded u/s 132(4) of the Director of the Bright Group Shri Rashid Masood nowhere stated the same of assessee as found noted in the said papers. Thereafter in the post search enquiries it was explained that the word “Kalra Ji” used in the said Annexures is for the assessee. In the petition filed before the settlement commission expenses was claimed towards the said payments as made in cash to the assessee out of undisclosed receipts. The Ld. AR drew our attention to the statement of Sh. Rasid Masood, Director of company M/s Bright Professional wherein in reply to question No.12, he stated the name of the faculty member wherein the name of the assessee is missing. He further drew our attention to reply to Question No.13 where Sh. Masood further admitted cash payments to various faculty members, however, the assessee’s name was missing in the said list. He further submits that in reply to question No.14, Sh. Masood had denied of having any receipts of obtaining any receipts of the cash payments made to faculty members.
The Ld. AR submits that there was no material to allege that there were any cash receipts issued by the assessee and solely for the reason that the assessee’s name was stated in the petition was filed before the Hon’ble Settlement Commission, as one of the faculty member to whom payments were made in cash out of undisclosed receipts of the institute addition was made in the hands of the assessee. Ld. AR submits that during the proceedings before the Ld. CIT(A) opportunity of cross examine the Director of Bright Group were allowed and one Director Sh. Sanjeev & 4309/Del/2019 Ashish Kalra vs. ACIT Gupta was cross examined on 28th November, 2018 in the presence of Mr. Rashid Masood, the other Director. It was claimed by the management of Bright Professional that classes were stared for large group of around 400 to 500 students and fir this auditoriums were taken on rental basis however, as per ld. AR Sh. Gupta has failed to even give the details of even a single auditorium where the class were carried out. It was further claimed by the management that assessee was taking classes in such auditorium, however, no evidence whatsoever was produced with respect to payment of rent and other expenses incurred for hiring / conduction the classes in such auditorium and was even the name of any of the auditorium was stated by Sh. Gupta.
The Ld. AR further submits that merely some name similar to the assessee i.e. “Kalra Ji” is appearing in the loose paper does not lead to conclusion that the same relates to the assessee. He further submits that in case of certain other persons also it was alleged that payments were also made to them in cash receipt for the teaching fees, however, in their cases the additions made were deleted by Ld. CIT(A).
Ld. AR further drew our attention to the order passed by Ld. CIT(A) for Assessment Year 2007-08 in the case of assessee himself, wherein the additions made on the basis of the same documents were deleted and no further appeal was preferred by the revenue. He thus, prayed that the additions made be deleted. Ld. AR also filed the detailed written submissions in this regard which reads as under: “GROUNDS 4 to 14-DISPUTED ADDITION OF RS 1,20,41,540 AND ENHANCEMENT OF TOTAL INCOME BY RS.5,00,000/- ON MERIST CIT(A) conclusions on merits of the matter are at pages 73 to 76, paras 4.1 to 4.4 6. There is no evidence to prove receipt of cash by the 'A' - Right from day one 'A' has denied receipt of any cash from M/s Bright Professionals. It is trite law now that without any corroborating evidence / material, any of the figures mentioned / appearing on an unsigned loose paper seized/collected by the department during the course of search has no evidentiary value. Moreover, provisions of section 292C are also not applicable in the & 4309/Del/2019 Ashish Kalra vs. ACIT instant case since action of search u/s 132 was not undertaken upon the 'A'. In the impugned order CIT(A) has relied upon various statements of representatives from M/s Bright. In this regard it is submitted as under: (1) Statement dated 25th November 2010 of Mr. Rashid Masood (copy enclosed at pages 14 to 26 of PB also reproduced by CIT(A) at pages 4 to 16 of his order) - This is a statement recorded u/s 132(4) of the Act i.e. during the course of search. It is apparent from a reading of this statement that nowhere it is alleged that Mr. Masood that 'A' was paid in cash by M/s Bright Professionals. Mr. Massod in reply to Q No. 8 clearly states that M/s Bright Professionals started coaching activity in year 2005 and "till 2008 coaching classes were given in small batches. In year 2008 onward the classes have been organized/conducted in batches of 300 students each.". Even at the time of search Mr. Masood has confirmed that there is no evidence available with them depicting payment to facility members in cash (refer Q Nos 15 and 19). Specifically, it was also stated that alleged cash payments "are not recorded in our regular books of accounts". Moreover, in Q 18 (at page 14 of CIT(A) order) Mr. Masood confirms that in this business Auditorium Rent is normally 15% of revenue collection. (ii) Statement dated 23rd October 2017 of Mr. Sanjeev Kumar Gupta recorded by CIT(A) on back of 'A' during appellate proceedings (copy enclosed at pages 158 and 159 of PB- also reproduced by CIT(A) at pages 28 to 30 of his order) - In Q2 of this statement Mr. Gupta confirms facts stated by Mr. Masood in his statement dated 25-11-2020. Further on Q4 of this statement it is accepted that 'A' had left teaching in M/s Bright Professionals from February/March 2008. (iii) Statement dated 28th November 2018 of Mr. Sanjeev Kumar Gupta recorded during cross-examination proceedings (copy enclosed at pages 86 to 91 of PB also reproduced by CIT(A) at pages 39 to 44 of his order) - During cross examination of Mr. Gupta, Mr. Masood was also present. During the course of cross examination specific questions were asked to Mr. Gupta to lead evidence in support of his contention that auditoriums were rented by M/s Bright Professionals. These evidences were relevant to demolish the false narrative being build by Mr. Gupta that 'A' was teaching to students in a large batch of 500 to 600 students in an auditorium (refer Q16 at page 41 of CIT(A) order) and hence was able to generate the amount of revenue in cash. In this regard (refer Q Nos 24 and 25) he was requested to furnish: (a) details of auditoriums rented (b) strength of each auditorium (c) evidence of payment of rent (d) student attendance register 6.1 However, CIT(A) restricted the 'A' from seeking a reply to the above questions. (refer comments of Shri Ashok Kumar Saroha, CIT(A) at pages 42 and 43 of CIT(A) order and page 45, para 3.13 of CIT(A) order). Here, it would be relevant to note the relevancy of these details which M/s Bright have colluded from the tax department in order to claim deduction for a bogus expenditure. Mr Masood has stated in his statement that "till 2008 coaching classes were given in small batches. In year 2008 onward the classes have been organized/conducted in batches of 300 students each.". It is not in dispute that 'A' stopped & 4309/Del/2019 Ashish Kalra vs. ACIT teaching in M/s Bright Professionals from February / March 2008 (i.e. 2008 onwards). Mr. Gupta however now states that auditoriums were rented for purposes of teaching a batch of 500 to 600 students by the 'A'. This is totally contradictory to facts stated by Mr Masood. Interestingly, Mr. Gupta has also not clearly answered the questions relating to exact fees being charged. It is also not practicable and possible that if as alleged by Mr. Gupta "50 classes in a batch" per subject is being taught by the 'A' for 500 to 600 students over a period of "two halves of the year" and that too daily two batches then every day different auditoriums will be arranged by M/s Bright Professionals. Kindly also note that in his statement Mr. Massod states that Auditorium Rent is around 15% of revenue collection. (refer page 14 of CIT(A) order Q18). If business was to be conducted at such large magnitude then one particular auditorium need be booked for a long duration i.e approx. 6 months. In such an eventuality, it should not be difficult for Mr Gupta to remember name of the auditorium or at least subsequently make an attempt to disclose the correct fact. The entire story made up by Mr. Gupta is not corroborating with the facts stated by him. Issue in dispute requires consideration from the angle of human probability. There is therefore inherent conflict in facts conveyed by Mr Masood in his statement u/s 132(4) and statement of Mr. Gupta recorded by your goodself. 6.2 Before CIT(A) 'A' submitted cogent evidences demonstrating following facts: (i) Premises in which classes were conducted by 'A' - 1/53 Lalita Park, Laxmi Nagar-this address is confirmed by Mr Gupta (refer Q No. 5 at page 40 of CIT(A) order - as address pertaining to M/s Bright Star) (i) Estimated strength of batches i.e 100-110 people. The above address i.e 1/53 Lalita Park, Laxmi Nagar has been confirmed by students to have capacity of only 100-110 students. Kindly refer affidavits filed by some of the students 'A' had taught while he was a faculty member of M/s Bright (refer pages 310 to 328 of PB-5 such affidavits were filed before CIT(A)). In these affidavits the students confirm that fee paid per student was approx. Rs 10,000/- for the entire batch and each session of the coaching class was for 4 hours in the classes were conducted thrice a week for a period of approximately five months. (iii) Sample study material given by the appellant to the students as part of his coaching curriculum for classes held at the premises of M/s Bright were also filed. The study material states the address were coaching classes were being conducted as 1/53 Lalita Park, Laxmi Nagar and not any auditorium. (refer pages 345 and 348 of the PB) (iv) Appellant's schedule of daily affairs during the period under consideration (refer page 340 of PB) Above affidavits and Study Material were filed before CIT(A) as additional evidence u/s 46A. Application u/r 46A is enclosed at pages 301 to 349 of the PB. CIT(A) has conveniently gloated over these evidence and not even admitted / allowed request made u/r 46A. Reasons given for rejection of Rule 46A are very vague (refer pages 70 to 72 of CIT(A)
& 4309/Del/2019 Ashish Kalra vs. ACIT order conclusions at page 72, para 3.26). CIT(A) has erred in not appreciating that these evidences were filed before CIT(A) only pursuant to his inquiry u/s 250(4) of the Act. He has erred in not even examining the relevancy of these evidences to the issue in despite (refer Text Hundred 351 ITR 57(Del) copy enclosed at pages 424 to 436 of PB-relevant at para 14). Moreover, no separate interlocutory order is passed by CIT(A) rejecting admission of additional evidence which is mandatory (refer Jyotsna Suri 128 taxman 33(SC)-copy enclosed at pages 437 to 438 of PB. In absence of any direct evidence being lead by M/s Bright Group, it was imperative upon the CIT(A) to either reject facts stated by M/s Bright Group, since this a case of an expenses being claimed by the M/s Bright Group (which 'A' has demonstrated to be bogus), it is necessary for them to come out clean and demonstrate the facts of transactions cleanly.
Annexure A-29 and A-30 i.e seized cash books cannot be relied upon to conclude receipt of cash by the 'A' As stated above, during search it was stated by Mr. Masood (at page 13, Q 15 of CIT(A) order) that alleged cash payments "are not recorded in our regular books of accounts" and (at page 12 and 13, Q 14 of CIT(A) order) that no cash receipts have been maintained by them. However, before CIT(A) Mr Gupta submitted copy of "ledger accounts highlighting payment to Shri Ashish Kalra". Copy of ledger from 01-04- 2006 to 31-03-2007 as submitted by Mr. Gupta to CIT(A) is enclosed at pages 98 to 114). It is surprising to note that a Trial Balance showing Debit of Rs. 98.41 lakh in name of "Kalra" as on 31st March 2008 has been furnished before CIT(A). Clearly, therefore, as an after-thought misleading information's are being provided by M/s Bright Group to the income tax department. Purposely to claim bogus expenditure. Moreover, it is submitted that copy of ledger account furnished by Mr. Gupta also does not pertain to the year under consideration. Moreover, this ledger account also shows that M/s Bright has received consideration from sale of tickets. Mr. Gupta has already stated before CIT(A) that 'A' had no role to play in the business carried on by M/s Bright Star (refer page 41, Q 12 of CIT(A) order). It is therefore clear that only with a view to claim inflated bogus expenditure that a common cash book (for two different businesses) is maintained by M/s Bright Group and certain bogus expenses are booked therein. Annexure A-29 and A-30 are therefore dump documents which cannot be relied upon. Kind reference in this regard is invited to the decision of Hon'ble Delhi High Court in case of Vatika Landbase reported in 383 ITR 320(Del) copy enclosed at pages 508 to 526 of PB relevant at page 524-525 and page 526 of PB. It is held by High Court that: "45. As pointed out in S.M. Aggarwal (supra) the said document can at best be termed as a 'dumb document which in the absence of 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 D.K. Gupta (supra) merely because there are notings of offers on slips of paper, it did not mean that those transactions actually took place. Likewise in 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.
& 4309/Del/2019 Ashish Kalra vs. ACIT 46. In the present case, there was again no material on the basis of which the AO could have applied a standard rate of Rs. 4,800 per sq. ft for all the floors of VT. It was also not open to the AO 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 the rate at which the flats on the second and third floors of VT was higher than that indicated in the sales register or the sale deeds themselves.
8. There is no corroborative evidence in favor of revenue - At pages 73 to 76, it is held by CIT(A) that the diary noting's in form of Annexures A-29 and A-30 are corroborative. In support of this plea CIT(A) relies upon: (a) The fact that cash payments have been allowed as deduction by ITSC (page 73, last para) - As already submitted above in para 4 above that ITSC orders are binding only for M/s Bright Professionals and Mr. Munish Bhandari i.e one such faculty member who accepted receipt of cash before ITSC). ITSC order does not note the details of cash payment or even remotely name the 'A'. ITSC order is a decision in personam. (b) The fact that on 06-06-2007 'A' received money via cheque of Rs.5,00,000/-from M/s Bright Star Air Travels Pvt Ltd which was returned back by the 'A' to M/s Bright Star Air Travels Pvt Ltd on 15-12-2007 (refer page 74, paras (vi) of CIT(A) order) - Here it is submitted that a sum of Rs 5,00,000/- was received by the 'A' from M/s Bright Star as loan and this sum was returned back after 6 months via cheque. CIT(A) erroneously presumes that this was an income of the ‘A’ which he got converted to cash. Here it will be relevant to note that: Mr Sanjeev Kumar Gupta acknowledges (at page 41, Q 12 of CIT(A) order) that 'A' had no role in business of Bright Star Air Travels. The. why will Bright Professional pay consideration of Rs.5,00,000/- to 'A' as business income subsequently to be converted to cash? The facts that sum of Rs. 5,00,000/- was in nature of loan gets substantiated by the fact that (a) upon payment of this sum on 06-06- 2007 no TDS was deducted by either Bright Star or Bright Professional, and (b) the loan stands repaid in cheque within 6 months. (c) At page 75 and 76 the CIT(A) summarizes some cash deposit and cash withdrawn entries in bank statements of M/s Bright. These are entries in Bank statements of M/s Bright - how they are relevant to entries in Annexures A-29 and A-30 has not been demonstrated/substantiated. How these entries are therefore relevant to the case of 'A' is only a figment CIT(A)'s imagination.
Case made up by M/s Bright Group against human probability and reasonable imagination and therefore clearly bogus expenses claimed by M/s Bright Group before ITSC-A perusal of Cash Ledger filed by Mr Gupta before your CIT(A) shows that following few expenses for taking auditorium on rent has been incurred by M/s Bright Group:
& 4309/Del/2019 Ashish Kalra vs. ACIT S. No. Date Particulars Amount 1 06.07.2006 Dr. Subhash (Auditorium Expense) 9,860 2 20.10.2006 Rajender Bhawan (Rent Auditorium) 30,000 3 10.10.2006 Raja Ram Mohan Roy (Auditorium) 5,500 4 16.11.2016 Rent Expenses 45,510 5 17.11.2016 Rent Expenses 37,400 6 29.11.2006 Raja Ram Mohan Roy (Auditorium) 13,610 7 06.12.2006 Institute of Engineers (Rent 30,000 Auditorium) 8 10.12.2006 Navshakti School (Rent Auditorium) 3,600 9 16.12.2006 Navshakti School (Rent Auditorium) 3,600 10 26.12.2006 Navshakti School (Rent Auditorium) 21,600 11 24.01.2007 Institute Engineers (Rent Auditorium) 50,000 12 31.01.2007 Navshakti School (Rent Auditorium) 10,000 13 07.02.2007 Navshakti School (Rent Auditorium) 7,200 14 09.02.2007 Navshakti School (Rent Auditorium) 2,800 15 17.02.2007 Navshakti School (Rent Auditorium) 2,400 16 23.02.2007 Dr. Subhash (Auditorium Expenses) 7,550 17 27.02.2007 Institute of Engineers (Rent 45,710 Auditorium) 18 01.03.2007 Navshakti School (Rent Auditorium) 16,000 19 05.03.2007 Navshakti School (Rent Auditorium) 13,800 20 07.03.2007 Raja Ram Mohan Roy (Auditorium) 7,700 Total 3,63,840 A perusal of above details depicts that total expense incurred on hiring of auditoriums is Rs 2,80,930/- even if two items of "Rent Expenses" is included then too the total Rental expense is Rs 3,63,840/-. As against this, let us presume that total expense of M/s Bright Group for payments made to the 'A' is as under: Payments made in cheque and offered to tax by Rs 17,69,660 Alleged cash payments Rs 1,20,41,540 Total Rs 1,38,11,200 The auditorium expenses stated in ledger must pertain to professional faculty of M/s Bright Group, but let us for a moment presume that it only represents those auditoriums which were rented for classes held by 'A' as allegedly is claimed that batches of 'A' were for 500 to 600 students. The percentage auditorium cost is therefore 2.63% (this percentage will be very low if payments made to other professionals are also considered). In his statement Mr Masood states that Auditorium Rent is around 15% of revenue collection. (refer page 14 of CIT(A) order Q18). Therefore, the story cooked up before income tax department by M/s Bright is against human probability and reasonable imagination. During first appellate proceedings Before CIT(A) it was specifically stated by the 'A' as under (refer pages 53 and 54 of CIT(A) order):
& 4309/Del/2019 Ashish Kalra vs. ACIT "......As stated above that if as alleged by Mr Gupta "50 classes in a batch" per subject is being taught by the 'A' for 500 to 600 students over a period of "two halves of the year and that too daily two batches for reserving an auditorium on daily basis throughout the year a trivial cost of only Rs 3,63,840/- would have been incurred by M/s Bright Group. Moreover, we have ascertained the strength of auditoriums stated above. None of them have capacity to accommodate 500 to 600 people. Raja Ram Mohan Roy and Navshakti School Auditoriums have a capacity of 200 to 250 people, whereas Auditorium at Institute of Engineers has a capacity of around 170-200 people. As your goodself is aware during the year under consideration 'A' was also conducting classes for its own coaching center in Janakpuri i.e M/s Institute of Grooming Professionals. P&L account of 'A' is enclosed at page 2 of PB. We have also produced before your goodself daily time schedule of 'A' in FY 2007-08. During the year under consideration 'A' had incurred expense for Rent in Auditorium for Rs 9,33,976/-. The gross receipts of 'A' from his own coaching center in FY 07-08 is Rs 25,37,071/. The percentage expense is approx. 36.81%. These facts are not in dispute. It is therefore apparent that no auditoriums were booked by M/s Bright Group for classes conducted by the 'A' vis-a-vis services rendered by the 'A' classes were held only at Laxmi Nagar and the total strength of that premises was to hold maximum of 100 to 110 students. It is therefore clear that bogus expenses of at least Rs 1.20 crore has been claimed by M/s Bright Group before ITSC." CIT(A) has conveniently ignored these contentions.
10. Similar issue decided in favor of 'A' - Similar Addition has been deleted by Ld. CIT(A) in case of 'A' for AYs 2007-08 copies of appellate order dated 11th June 2015 passed by CIT(A)-23 in appeal no. 268/14-15 is enclosed in paper book at pages 59 to 79. Moreover, it is submitted Ld. CIT(A) in his appellate order for AY 2007-08 has noted that: *...in case of Smt. Surbhi Sen Jindal, which appeal was also decided by me, I found that the person was medically unfit to render professional serviced during the periods in which cash payments had been shown against her name in the register of BPL. In the case of another such professionals heard by me, cash receipts allegedly made by BPL were similarly found to be highly excessive compared to the services rendered." The above finding clearly demolishes the correctness of Annexures A-29 and A-30. It is further submitted in another case of Mr. Vikas Kapoor (another professional who was associated with M/s Bright Group and whose name is clearly apparent in statement of Mr. Masood and in Annexure A-29 and A-30) vide order dated 28th March 2017 in Hon'ble ITAT has delated the disallowance. Copy of this order is enclosed in paper books ate pages 160 to 208.
& 4309/Del/2019 Ashish Kalra vs. ACIT 11. Affidavits filed by Mr Gupta are also vague -Before CIT(A) vide letter dated 25th October 2017 (copy at page 93 of PB) it is stated before your goodself by Mr. Massod and Mr. Gupta as under: "We have recorded a statement on 23 October, 2017 in connection with the appellate proceedings under Income Tax Act, 1961 in case of Sh. Ashish Kalra that two faculties Mr. Manoj Batra and Mr. Monga has given affidavits confirming that cash payments made to them during assessment years 2007-08, 2008-09, 2009-10. But as it is a old record we could not memorize the names. When we check the records, we found that faculties who accepted and given affidavits confirming the cash payments made to them were Mr. Manoj Batra (Named Manoj Kumar) and Mr. Gautam Sethi, We are submitting the copy of affidavits along with copy of seized cash book highlighting the payments made to the above said faculties." A perusal of affidavits of Mr. Manoj Batra and Mr. Gautam Sethi (copy at pages 94 to 97 of PB and reproduced by CIT(A) at pages 34 to 37 of CIT(A) order) clearly shows that none of these professionals have admitted receipt of cash. As demonstrated above this is a fit case were in ITSC should be informed that bogus expense have been claimed by M/s Bright Group and therefore the settlement made is liable to be quashed u/s 2450(6) for being obtained by fraud or misrepresentation.
11. Without prejudice, enhancement bad in law - Enhancement of Rs 5,00,000/-made by Ld CIT(A) is premised upon Q. No. 7 recorded in statement of Mr Gupta dated 23rd October 2017. In this regard, it is submitted that during cross-examination on 28 November 2017 Mr. Gupta has conveyed following further facts: "(TS) (Q.27) Can you clarify why a sum of Rs.5,00,000/- was received by you from Sh. Ashish Kalra vide cheque No.0264665 on 15th December, 2007? (SKG) Ans. It was a part of receipt which was later on reimbursed by the cash which is reflected in the seized record. (TS) (Q.28) Why a cheque of Rs.5,00,000 bearing cheque No.947951 dated 06.06.2007 issued by M/s Bright Star Air Travels Pvt. Ltd.? On clarification being asked by Sh. Ashok Kumar Saroha, Sh. Tarandeep Singh clarified that it is the same cheque which is referred to in answer to question No.7 of statement dated 23.10.2017. (SKG) Ans. It was a part of remuneration / share of revenue of a particular batch as demanded by Sh. Ashish Kalra from M/s Bright Star Air Travels Pvt. Ltd. Later on, a cheque of equal amount was returned and cash of equal amount was demanded which was exceeded to." ‘A’ concurs with statement of Mr Gupta wherein he states that payment of Rs 5,00,000/-in cheque by M/s Bright Star was subsequently returned back later. 'Before CIT(A) A' had furnished before CIT(A) bank statement wherein the above sum of Rs 5,00,000 was returned by the 'A' to M/s Bright Star (refer page 293 of PB). This was a temporary loan & 4309/Del/2019 Ashish Kalra vs. ACIT transaction. The very fact that unlike other payments made by M/s Bright Group to 'A' in cheque, while making payment of above Rs. 5,00,000/- no TDS was deducted shows that payment of this sum by M/s Bright is not a transaction of expense in books of M/s Bright or income for 'A'. 'A' denies the fact that on return of this cheque equivalent cash was paid by M/s Bright Group. Even, otherwise if this be so then too the addition for that has been made by the AO. No separate addition is therefore called for.”
On the other hand, the Ld. CIT-DR vehemently supported the orders of the lower authorities and submits that they were evidences found as a result of search from the possession of the management of M/s Bright Croup where the assessee was providing the services of teaching to the CA students. Further Ld. CIT-DR submits that Ld. CIT(A) has discussed the issues in details and also considered the arguments taken by the assessee and after considering the facts and the submissions has confirmed the additions, as discussed in para 7.1 to 7.9 of his order. He further submits that the assessee has received a sum of Rs.5,00,000/- through cheque which was stated as received as loan, however, it was receipt against the professional services and not disclosed, therefore, the Ld. CIT(A) has rightly held the same as undisclosed receipt of the assessee and, therefore, the Ld. DR requested for the confirmation of the order of Ld. CIT(A).
Heard both the parties and perused the materials available on record. In the instant case, the sole issue is with respect to the cash receipts as found noted in Annexure-A 29 and Annexure-A-30 found during the course of search from business premises of M/s Bright Professionals Pvt. Ltd. Assessee since beginning of the proceedings was denying the receipts of any such fee in cash. It was further submitted that the claim of the management of M/s Bright Professional Pvt. Ltd. that the classes were being taken by the assessee wherein more students had attended was not correct as assessee never took any class of such high number of students as & 4309/Del/2019 Ashish Kalra vs. ACIT per stated by the management who has failed to provide the details of the auditoriums where such classes were carried out.
It is seen that in the preliminary statement recorded u/s 132(4) at the time of search of Sh. Rashid Masood, Director of M/s Bright Professional Pvt. Ltd. and M/s Bright Star Air Travel Pvt. Ltd. on 25.11 .2010, as available at PB page 14 to 20, he nowhere stated that the word “Kalra Ji” found noted in the Annexure A-29 and A- 30 represents the cash payments made to the assessee. It is further seen that in the same statements Sh. Masood has accepted that there was no evidence of payment in cash to the faculty members. It is further seen that in the statement of Sh. Sanjeev Kumar Gupta during his cross examination, they accepted that the assessee has left teaching in M/s Bright Professional from February/March 2008 and no details were given with respect to the auditoriums wherein the large number of 400 to 500 students were got teaching. It is further seen that the details like rent paid, strength of each auditorium, evidence of payment of rent, student attendance register were asked to produce during the cross examination of Sh. Gupta, however, such details were never provided. Surprisingly, if such a large number of students were being provided coaching facility on regular basis, it could not be possible to change the Auditorium on daily basis and one has to keep the auditorium at least for a period of 15 to 20 days in row and thus, it could not be acceptable that neither the details of auditorium were available nor any rent was paid. All these facts clearly suggests that there was something missing in the claim made by the management before the Hon’ble Settlement Commission with respect to the expenses towards payments to faculty members in cash out of undisclosed receipts.
It is further seen that in the case of the assessee for Assessment Year 2007- 08, additions of similar nature by making similar allegation based on the same loose & 4309/Del/2019 Ashish Kalra vs. ACIT papers Anx. A-29 and A-30 were made to the tune of Rs.37,13,650/-, which were deleted by Ld. CIT(A) by making following observations: “4. I have considered the assessment order and the submissions made. The appellant has challenged the re-assessment on legal as well as factual grounds. We shall take up the factual grounds first. 5.1 Briefly stated, facts are that during search in the case M/s Bright Professional Private Limited (BPL) and its directors, registers were seized which recorded cash payments and receipts on various dates. The payments included various amounts paid to certain persons on different dates. It transpired that some of these persons had been giving coaching to students of the said company/coaching centre. Based on the entries recorded in the said register and other evidences seized, BPL and its directors approached the Income Tax Settlement Commission (ITSC) with application u/s 245C admitting undisclosed income from coaching and claiming the cash expenses, including the amounts paid to various professionals, as expenditure out of the said undisclosed income. The said application was admitted by ITSC and order was passed u/s 245D. Consequently, revenue has initiated 153C/147 proceedings in the case of all these professionals, including the appellant, and assessed the payments made by BPL to these persons as their undisclosed professional income. The reason given by the revenue is that admission of undisclosed income by BPL/its directors and admission of the settlement case, as well as similar application by one of the professionals Sh. Munish Bhandari, established the fact that these professionals had received unaccounted cash payments as professional fees. The appellant is, however, denying that he received any cash payment during FYs 2005-06 & 2006-07. In fact, the appellant claims that though he had rendered professional service to BPL during this period, he took classes for about 200 students of BPL from April, 2006 to March, 2007 and received Rs.2,40,000/- @ about Rs.1200/- per student. During the same period he took classes of 200 students in his own institute by the name of IGP. Since each batch is taught 50 sessions of about 4 hours each on alternate days, the appellant in any case could not have taught more than 6 batches for BPL and the maximum fees for such service came to only Rs.7,20,000/-. Thus, the question of receiving the huge amount of Rs.37,13,650/- during that year did not arise under any circumstances. 5.2 The denial by the appellant is not controverted except for the fact that certain entries have been recorded in his name in the registers seized from BPL/its directors, and that the said documents have been admitted before the ITSC by BPL as well as one of the professional teachers. On the other hand, no professional, except one such person, has approached the ITSC with any settlement petition. In the case of Smt. Surbhi Sen Jindal, which appeal was also decided by me, I found that the person was medically unfit to render professional 70 services during the periods in which cash payments had been shown against her name in the registers of BPL. In the case of another such professional heard by me, cash receipts allegedly made by BPL were similarly found to be highly excessive compared to the services rendered. 5.3 No doubt, BPL and one of the professionals have admitted unaccounted cash receipts/payments in their applications before ITSC and that these applications stand & 4309/Del/2019 Ashish Kalra vs. ACIT admitted confirming such fact. However, the applications before ITSC and admission of the same establish the fact of unaccounted cash receipts/payments qua those persons but it does not establish such transactions qua the persons who have not admitted this fact. For the income to be assessed in the hands of persons denying receipt of unaccounted cash payments, further investigation and confirmation of such fact was required but was never completed by the revenue. In fact, I find that neither copy of the documents relied upon by the revenue nor opportunity to examine/cross-examine the directors of BPL was made available to professionals who had denied receipt of any cash payments. Accordingly, in these set of facts and circumstances, I hold that the said amounts cannot be assessed in the hands of these professionals, including the appellant, unless corroborative evidence is collected to confirm / establish the fact of cash payments. It is well established that entries of payments recorded in the books/diary/register cannot form the sole basis for holding such entries as receipts/income of the persons in whose name such entries are recorded unless corroborative evidence is found establishing such fact (CBI vs. V C Shukla & Ors. 3 SCC 410). 5.4 In view of the above, the addition made by the revenue, in the absence of any corroborative evidence, is without any legal basis and is deleted. Relief is allowed to the appellant on substantive basis.”
It is relevant to state that order of ld. CIT(A) deleting the additions made in Assessment Year 2007-08 has been accepted by Revenue and no further appeal was preferred against the said order wherein the sole basis of addition is the same document.
It is further seen that in the case of the other faculty members, whose name were appearing as the recipient of cash against teaching in the said papers as claimed in the petition filed before the Settlement Commission were also deleted by Ld. CIT(A) in their respective cases which order have also been attained finality. Further in the case of one faculty member namely Sh. Vikash Kapoor in Del/2016, Co-ordinate Bench of ITAT Delhi (SMC) deleted the additions made.
With respect to the enhancement of the income, we find that the assessee has claimed that it was the amount of loan received from the company M/s Bright Star Air Travel Pvt. Ltd. which was repaid during the year itself and the necessary copies & 4309/Del/2019 Ashish Kalra vs. ACIT of the bank statements were filed. The AO wrongly treated the same as undisclosed receipts once the amount was repaid and it cannot be held that it was the undisclosed receipts from coaching classes.
In view of the above facts and also considering the facts that in the instant case, there wwere no corroborative evidences brought on record for making such kind of addition in the hands of the assessee.
In the case of Vatika Landbase Pvt. Ltd. -383 ITR 320 (ITA No.670/2014 dated 26.02.2016) Delhi High Court has made following observations: “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 consideration by the ITAT was as under: "Did the was framed for 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.
& 4309/Del/2019 Ashish Kalra vs. ACIT 40. Turning to the case on hand, the document 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 (1) 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.
Considering that the document was recovered 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. …………….
The Revenue has not been able to counter the submission of the Assessee that there are anomalies in the figures mentioned in Sheet Nos. 3 and 4 of the said document. ……………… 45. As pointed out in Commissioner o(Income 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 Corħmissioner 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.
In the present case, there was again no material on the basis of which the AO could have applied a standard rate of Rs 4,800 per sq. ft for all the floors of VT. It was also not open to the AD to draw an inference on the basis of thie 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.
& 4309/Del/2019 Ashish Kalra vs. ACIT 47. In the circumstances, the Court is of the view 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. 48. For the aforementioned reasons, the question framed by the Court is answered in the negative, i.e., in favour of the Assessee and against the Revenue.”
In the instant case, the documents were found in possession of the third party and none of the paper contained the name of the assessee. Solely for the reason that the company in whose possession those papers were found and seized, has claimed that they contained the entries of unrecorded payments to various faculty members in the petition filed before the settlement commission and no further corroborative evidence was brought on record to establish the link between the said entries and the assessee as recipient of such cash, no addition could be made in the hands of the assessee. Further the receipt of Rs. 5.00 lacs for which enhancement was made by ld. CIT(A) we find that the said sum of Rs. 5.00 lacs was returned by the assessee to the other company of the same group namely M/s Bright Star for which the necessary bank statements was also filed. Further no evidence was brought on record that the assessee has received this sum of Rs. 5.00 back in cash from the Bright group.
In view of these facts and discussion made herein above, and further by respectfully following the judgements of various hon’ble High courts and of hon’ble Supreme court as referred to above, in our considered opinion, the assessee has demonstrated that he never received any cash towards the coaching given tot eh students nor his name was admitted by the Director in his preliminary statements recorded u/s 132(4), thus, we hereby direct the AO to delete the addition made by the AO. Accordingly, all these grounds of appeal are allowed.
& 4309/Del/2019 Ashish Kalra vs. ACIT 29. In the result, the appeal of the assessee for Assessment Year 2008-09 in is allowed. ITA No.4309/Del/2019 for Assessment Year 2009-10 30. As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while deleting the additions in the appeal filed by the assessee in AY 2008-9 herein above, the addition made in this year also are deleted. Accordingly, all the Grounds of appeal taken by the assessee in the present appeal for AY 2009-10 are allowed.
In the result, both the appeals of the assessee are allowed. Order pronounced in the open Court on 14.10.2025.