SHRI AJAY SARAF, Nagpur V. DY. C.I.T. CENTRl cir.-2(2), Nagpur

CO 11/NAG/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3429 (ITAT-NAGPUR)
• Duration Of Justice: 5 year(s) 4 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-04-2022
• Assessment Year: 2006-2007
• Appeal Filed On: 15-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KOLHE
• Assessee Lawyers: SUDESH BANTHIA
• Keywords: Unexplained expenditure; Salary income; Loose papers; Valuation report; Retraction
• Section: 131; 143(3); 153A; 250; 13; 22

Judgement Text

आयकर अपीलीय अधिकरण, नागप ु र न्यायपीठ, नागप ु र IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH NAGPUR BEFORE SHRI SANDEEP GOSAIN, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं./ITA Nos.506, 508 & 509/NAG/2016 Assessment Years. : 2006-07, 2009-10 & 2011-12) Dy.CIT, CIR-2(2), Nagpur Vs Ajay Govinddas Saraf, Flat No.2, Yogeshwar Ganga Apartment, 97-98, Farm Land, Ramdaspeth, Nagpur-12 PAN No. : AQFPS 2701 K AND Cross Objection Nos.11, 13 & 14/NAG/2017 (Arising out of ITA Nos.506, 508 & 509/NAG/2016) Assessment Years. : 2006-07, 2009-10 & 2011-12) Ajay Govinddas Saraf, Flat No.2, Yogeshwar Ganga Apartment, 97-98, Farm Land, Ramdaspeth, Nagpur-12 Vs Dy.CIT, CIR-2(2), Nagpur PAN No. : AQFPS 2701 K (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) राजस्व की ओर से /Revenue by : Shri Piyush Kolhe, CIT निर्ााररती की ओर से /Assessee by Shri Sudesh Banthia, CA स ु िवाई की तारीख / Date of Hearing : 19/04/2022 घोषणा की तारीख/Date of Pronouncement : 25/07/2022 आदेश / O R D E R Per Arun Khodpia, AM: The revenue has filed three appeals against the order passed by the CIT(A)-4, Nagpur, all dated 29.06.2016, vide order no. CIT(A) – 4/82/13-14, 4/84/13-14, 4/85/13-14 for the assessment year 2006-07, 2009-10 and 2011-12 on the following grounds of appeal:- ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 2 Grounds raised for A.Y.2006-2007(ITA No.506/NAG/2016) as under:- 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.60,00,000/- being cash paid for purchase of necklace/jewellery without appreciating the fact that on being confronted with the seized documents, the assesee had accepted the fact that cash of Rs.60,00,000/- was paid and it was not accounted for in the books of accounts, during the course of the search proceedings and the assesee had not brought on record any documentary evidence in support of its claim during the assessment proceedings. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.94,00,000/- being cash paid for purchase of property without appreciating the fact that on being confronted with the seized documents, the assesee had accepted the fact that cash of Rs.94,00,000/- was paid and it was not accounted for in the books of accounts, during the course of the search proceedings and the assesee had not brought on record any documentary evidence in support of its claim during the assessment proceedings. 3. Any other ground that may be urged at the time of hearing. Grounds raised for A.Y.2009-2010 (ITA No.508/NAG/2016) as under:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.25,00,000/- being cash paid for purchase of jewellery without appreciating the fact that on being confronted with the seized documents during search proceedings, the assessee had accepted the fact that cash of Rs.25,00,000/- was paid and it was not accounted for in the books of accounts and also confirmed the same during the course of the post search proceedings. 2. On the facts and circumstances of the case, whether the Ld. CIT(A) has erred in deleting the addition of Rs.2,00,00,000/- on account of cash paid for purchase of property, since the addition in the case of Smt. Anju 'Saraf has been contested by the assessee and the matter has not reached its finality," 3. Any other ground that may be urged at the time of hearing. ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 3 Grounds raised for A.Y.2011-2012 (ITA No.509/NAG/2016)as under:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.84,20,000/- being expenditure incurred in cash paid for various expenses without appreciating the fact that on being confronted with the seized documents, the assessee had accepted the fact that cash of Rs.84,20,000/- had been paid for various expenses and it was not accounted for in the books of accounts, during the course of the search proceedings and the assessee had not brought on record any documentary evidence in support of its claim that there was no expenditure in cash during the assessment proceedings. 2. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs.1,12,61,153/- being cash found in the business premises as the matter has not reached finality in the case of the firm, 'M/s. RBSSN. 3. On the facts and circumstances of the case, whether the Ld. ClT(A) has erred in deleting the addition of Rs.10,00,000/- on account of cash paid for purchase of property, since the addition in the case of the firm, M/s. RBSSN has been contested by the assessee and the matter has not reached its finality. 4. Any other ground that may be urged at the time of hearing. 2. Since, all these appeals are for the same assessee involving common issues, except variation in figures, which are based on identical set of facts and circumstances, therefore, as a matter of convenience and brevity, these appeals were clubbed and heard together and are being disposed off by way of this consolidated order. We now proceed to deal with issues chronologically raised by both the parties on merits. 3. Brief facts as stated are that the assessee is partner of M/s RB Seth Shriram Narsinghdas (RBSSN Group), derives salary income & profit from the firm. Also have income from salary from M/s Rajlaksmi Transports as well as income from other sources. Maintains proper books of accounts ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 4 and regular in filing return of income. A search was conducted on RBSSN Group on 24/09/2010, wherein the assessee is a partner, therefore notice u/s 154A of the Act was issued and after tacking into all the facts and circumstances of the case the AO passed orders for all three Assessment years were passed by the Ld AO u/s 143(3) r.w.s. 153A of the IT Act 1961 on 07.03.2013. Certain disallowances were made by the Ld AO for respective assessment years. Aggrieved thereby, Assessee preferred appeals before the first appellate authority, where relief was granted to the assesse. Unsatisfied with the observations of the Ls CIT(A), the department is in appeal before us for all three Assessment Years on the following grounds :- Ground Disallowance AY 2006-07 AY 2009-10 AY 2011-12 1st Undisclosed income in respect of cash paid for purchase of Jewellary Rs. 60 Lac (Ground 1) Rs. 25 Lac (Ground 1) - 2nd Undisclosed income in respect of cash paid for purchase of Property Rs. 94 Lac (Protective Basis) (Ground 2) Rs. 2 Crore (Protective Basis) (Ground 2) 3rd Undisclosed income in respect of cash paid for Various unexplained expenditure Rs. 84.20 Lac (Protective Basis) (Ground 1) 4th Cash found during the search Rs. 112.61 Lac (Protective Basis) (Ground 2) 5th Cash found during the search at home and in Locker Rs. 10 Lac (Protective Basis) (Ground 3) 4. The first ground of appeal raised by the revenue is regarding deletion of addition by the Ld CIT(A) relates to Undisclosed income in respect of cash paid for the purchase of the Jewellery by the assessee. ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 5 Ground Disallowance AY 2006-07 AY 2009-10 1st Undisclosed income in respect of cash paid for purchase of Jewellary Rs. 60 Lac (Ground 1) Rs. 25 Lac (Ground 1) 5. On this issue Ld DR drew our attention to the Assessment orders u/s 143(3) rws 153A, reiterated the findings of the Ld AO and vehemently argued that the additions made are well examined, analyzed and explained, based on facts, are worth confirmation. He further submitted that, when the assessee himself by giving statement u/s 132(4) has accepted the fact that such payments were made by him in cash, which are unaccounted and has offered the same as additional income. There is no further scope to have a different opinion on the same and therefore Ld CIT(A) has grossly erred in deleting such additions, order of Ld CIT(A) deserves to be annulled on this issue and order of Ld AO has merit to be sustained hence shall be restored. 6. Ld AR of the assessee on the other hand has submitted his argument by way of written submission on this issue as under :- Ground No 1: The AO in his order passed u/s 153A r.w.s.143(3) has made addition of Rs 60,00,000/- as cash paid for Jewellery purchase on the basis of seized document and statement recorded u/s 132 which was retracted with evidence by the appellant. The Ld. CIT Appeal has rightly deleted addition of Rs.60,00,000/- (Para No 5.3-Page No 9 of CIT (A) Order) made by the AO, both on merits and legality by holding a) I find that it is mentioned in the impugned document (Page No 27 -Annexure B- 1/12 Incorporated by AO on Page No 2 of his order) that cas of Rs 601- has been paid and the inference drawn by the AO on the basis of impugned document that the appellant has paid Rs. 60 lacs in cash for Jewellery purchase is merely on presumption. The AO has failed to bring on record any evidence in support of his presumption. b) That no addition can be made merely on the basis of statement which has been retracted by offering explanation and ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 6 supporting the same with evidence that no understatement in value of necklace shown in books of accounts or in wealth tax returns as compared to value mentioned in valuation report made by department during search was found and no such necklace of Rs.60 lacs is found mentioned in the said valuation report. Written submission made by the assessee in ITA No.508/NAG/2016 in para 1.0 to 1.2 is as under : 1.0 Ground No 1 : The AD has made addition of Rs 25,00,000/-as cash paid for Jewellery purchase on the basis of seized document and statement recorded u/s 132 which was retracted with evidence by the appellant. 1.2 The Ld. CIT Appeal has rightly deleted addition of Rs.25,00,000/- (Page No 19 of CIT(A)Order) made by the AO by holding that a) Nowhere it is mentioned in the impugned document incorporated by AO on Page No 8 of his order that cash of Rs 25 Lacs has been paid in cash. In fact, the noting shows that the amount is balance and not yet paid. The document is undated and the AO has not brought on record any corroborative evidence to show that cash was actually paid for Jewellery purchase and the same wa paid during the year under consideration. The AD has merely presumed that cash has been paid and addition on the basis of presumption cannot be sustained. b) That no addition can be made merely on the basis of statement which has been retracted by offering explanation and supporting the same with evidence. That no understatement in value of necklace shown in books of accounts or in wealth tax returns as compared to value mentioned in valuation report made by department during search was found and no such necklace of Rs.25 lacs is found mentioned in the said valuation report. 7. Ld AR also drew our attention to para 5.3, 5.4, 5.5 and 5.6 of the order of CIT(A) for AY 2006-07 regarding disallowance of Rs. 60 Lac, which reads as under:- ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 7 5.3 The AO referred to the statement of Shri Ajay Saraf recorded at the time of search on 26-09-2010 and observed that the payment of Rs.60 lacs in cash has been accepted by the assessee. On this issue, the learned AR has vehemently contended that the statement was given under mistaken belief and the retraction was first made by not including the impugned disclosure while filing the return of income. Thereafter when the copy of the statement was provided at the time of assessment, once again it was immediately retracted alongwith reasons for such retraction. The submission of the assessee in the assessment proceeding is reproduced at Page 3 of the assessment order and I find that the assessee has denied and retracted the contents of the statement after the receipt of same in the assessment proceeding. It has been categorically mentioned by the assessee that the statement was given and the disclosure was obtained from the appellant under the peculiar situation. Thus no conclusion can be drawn on the basis of such statement which has been retracted by the assessee. There has to be some credible evidence which is found as a result of search or may be as a result of enquiries on the basis of such evidence. 5.4 I have also carefully perused the seized document at Page No.27 on the basis of which the addition is made. I find that nowhere it is mentioned in the document that the amount of Rs. 60 la cs has been paid in cash. I find that it is mentioned in the impugned document that Rs.60 / - has been paid. There are other notings as well and is mentioned that the value of second order is Rs. 3.86 Lacs and cheque of Rs.68,640/- to be sent for the necklace bought. These two figures have been accepted as it is by the AO. Thus wherever the amount was paid in lacs it is specifically mentioned as 3.86 lacs. The basis for presumption of noting of Rs.60/- as the coded value of Rs. 60 lacs is not coming out of the impugned seized document nor any other seized material. The interpretation drawn by the AO is without any basis. Further the assessee has offered an explanation during the course of assessment proceedings that Rs. 60/- was paid to the delivery boy. Thus the assessee has offered an explanation which is plausible. The inference drawn by the AO on the basis of impugned document that the appellant has paid Rs. 60 lacs in cash is merely on presumption. No addition can be made merely on the basis of surmises and conjectures. The AO has failed to bring on record any evidence in support of his presumption. 5.5. The learned AR of the appellant in his explanation before AO and before me stated that no such necklace representing the alleged investment of Rs. 60 lacs was found during search and the same is also not mentioned in the valuation report made by the approved valuer of the department-during search. Further no understatement in value of necklace shown in books of accounts or in wealth tax returns as compared to value mentioned in valuation report was found. The appellant also contended that all jewellery found during search & mentioned in valuation report has been ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 8 shown in wealth tax returns filed on 31/3/2007 i.e. prior to the date of search. The AO has not disputed this in his order. I find that no such necklace of Rs.60 lacs is found mentioned in the valuation report made by department during search. 5.6. On the issue that the necklace which was purchased for Rs.68,640 /- was returned back, the AO in his order stated that the explanation given by the appellant is an after thought. The appellant has stated that there is no cheque payment of Rs. 68,640/-. However I find that the AO has correlated this transaction with a different transaction amounting to Rs. 68,250/- which is a cheque payment. The assessee has produced the bill against the aforesaid cheque payment made by RBSSN to M/s Krishnaiah Chetty & sons on 13/5/2005. The appellant explained to AO that the necklace of Rs.68,640/- mentioned in noting was in fact returned by him. Another necklace was purchased on 14/5/2005 (Copy of bill enclosed) for which payment of Rs 68,250/- was made by M/s RBSSN. The AO has presumed that the payment of Rs. 68,250/- is in respect of the necklace mentioned in the impugned document, but then the same is duly accounted in books and the AO has also accepted this fact in his order. I find that the assessee has discharged the onus which lie upon him and the presumption drawn against him was rebutted with the help of evidence. I find no reason to disagree with the explanation given by the appellant. I therefore hold that no addition can be made merely on the basis of statement which has been retracted by offering explanation .and supporting the same with evidence. Thus I hold that there was no evidence found in the search proceedings for payment of Rs. 60 lacs in cash and the addition made on presumption cannot be sustained. Accordingly, the allegation of unaccounted investment outside the books of account has not been established. Thus after taking into consideration all the cumulative material facts, appellants submission and the judicial pronouncements relied upon by the AR of the appellant, I am of the considered opinion that the addition made by AO of Rs.60,00,000/- is not justified. The addition of Rs 60,00,000/- is therefore directed to be deleted. This ground is therefore allowed. 8. Further, regarding disallowance of Rs. 25 Lac in AY 2009-10 under this ground Ld AR shown us the observation of Ld CIT(A), which is as under:- ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 9 6.4. I have also carefully perused the seized document at Page No.16 on the basis of which the addition is made. I find that nowhere it is mentioned in the document that the amount of Rs. 25 lacs has been paid in cash. Rather I find that the noting suggest that the amount is in balance Le. not yet paid. Hence it is obvious that no inference can be drawn on the basis of the impugned document that the cash was paid. There is no other corroborative evidence brought on record by the AO to hold that the cash was actually paid for purchase of jewellery. Further, I find that the document is undated and is loose sheet and not a note pad as mentioned by the AO. The AO has presumed that the cash has been paid in December, 2008 although he agrees that there is no mention of any date in the impugned document. The loose papers found and tagged together cannot be the basis to presume the date of transaction. The learned AR drew my attention to the Annexure B-1/10 and I find that it is not a note pad and nine pages out of them are undated and the other loose pages are for the dates ranging from 8th May, 2007 to 3rd December, 2008. Thus it is merely a presumption by the AO that the cash has been paid and further that such payment has been made in the month of December, 2008. On the same seized document, there is another noting of Rs. 26L about which the AO is satisfied that the transaction has not occurred and no addition has been made. Thus the document has been selectively interpreted which in my opinion is unjustified on the part of AO. The document has to be read in full and then only inference should be drawn. The contention of the Ld. AR that the impugned document is merely a dumb document and the AO has merely relied on the rough noting made on a dump paper without bringing on record any corroborative evidence to show that the appellant had actually made the payment of cash of Rs. 2iS Lakhs as per the rough jottings mentioned on the impugned document carries substantial force. No corroborative evidence found on search has been brought on record by the AO to show that any payment has been made in cash to M/s Krishnaiah Chetty for acquisition of jewellery and the same was paid during the year in question. I therefore hold that the AO has merely presumed that Rsl25 Lacs has been paid in cash. The addition on the basis of presumption cannot be sustained unless the AO brings on record any evidence in support of such presumptions. 6.5. The Ld. AR of the appellant in his explanation before AO and before me stated that no such jewellery representing the alleged investment was found during search and the same is also not mentioned in the valuation report made during , search. Further no understatement in value of jewellery shown in books of accounts or ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 10 in wealth tax returns as compared to value mentioned in valuation report was found. The appellant also contended that all jewellery found during search has been shown in wealth tax returns filed on 30/08/2011 which has been accepted by the department. The AO has not disputed this in his order. The AO in his order stated that the assessee has simply denied the payment and it is the onus of the assessee to explain any incriminating evidence found during the search. I find that the assessee has discharged the onus which lies upon him and has rebutted with the help of evidence. I therefore hold that no addition can be made merely on the basis of statement which has been retracted by offering explanation and supporting the same with evidence. There was no evidence found in the search proceedings for payment of Rs.25 lacs in cash and the addition made on presumption cannot be sustained. Accordingly, the allegation of unaccounted investment outside the books of account has not been established. Thus after taking into consideration all the cumulative material facts, appellants submission and the judicial pronouncements relied upon by the AR of the appellant, I am of the considered opinion that the addition made by AO of Rs.25,00,000/- is not justified. The addition of Rs.25,00,000/- is therefore directed to be deleted. This ground is therefore allowed. 9. We have considered the rival contentions, perused the material available and orders of the revenue authorities. On perusal of the Ld CIT(A)’s orders and findings, wherein the issues were well thought-out, assessees explanations on this issue were considered plausible and findings of the AO were found to be without merits. We have found the order of CIT(A) well explained and judiciously observes. Therefore, we do not found any error, illegality or infirmity in the findings of the Ld CIT(A) to be interfered with. No deviating judgment was brought to our notice to have a different opinion. We therefore uphold the orders of the CIT (A) on this issue and accordingly this ground of the revenue is dismissed. ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 11 10. The 2 nd issue of the controversy raised by the revenue is regarding undisclosed income in respect of cash paid for purchase of Property. Ground Disallowance AY 2006-07 AY 2009-10 2nd Undisclosed income in respect of cash paid for purchase of Property Rs. 94 Lac (Protective Basis) (Ground 2) Rs. 2 Crore (Protective Basis) (Ground 2) This issue was challenged by the revenue in two years i.e. for Rs. 94 lac in AY 2006-07 and Rs. 2.00 Crore for AY 2009-10. Both this additions were made on the assessee on protective basis by the Ld AO. 11. On this issue Ld DR vehemently supported the assessment done by the Ld AO, drew our attention to para’s narrated by the Ld AO, observations of the CIT(A) and argued that the AO’s assessment was factually correct, it was based on seized material annexed at page no. 2 of B-1/9, acceptance of the assessee to offer the amount additional income which was not accounted in their books of accounts. Therefore, contrary observations of the CIT(A) are absolutely erroneous and deserves to be set aside, accordingly order of the ld AO should be restored. 12. Ld AO on this controversy has submitted that the issue for AY 2006-07 for Rs. 94.00 Lac has already settled by the Hon’ble Tribunal in the case of M/s R.B. Seth Shriram Narsingdas vide its order in ITA 207/NAG/2015 dated 27/12/2017, where in this same disallowance was made on substantive basis and Hon’ble Tribunal has decided this issue in favour of assessee by upholding the order of Ld CIT(A). Hon’ble ITAT on this issue has decided as under:- ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 12 9. We have heard the Id. DR for the Revenue and Id. AR of the assessee and perused the material available on record. The Id. DR for the Revenue supported the order of AO and argued that the Id. CITCA) deleted the addition by ignoring the incriminating material evidence found during the course of search which was not explained by the assessee. On the other hand, the Id. AR of the assessee supported the order of Id. CIT(A). The Id. AR of the assessee argued that during the search proceeding the statement of Shri Ajay Saraf was recorded. Mr. Ajay Saraf explained that there was a proposal for purchase of flat in Embassy Park admeasuring 1000 sq. Ft. on 19.01.2006 from Dynasty Developer and the documents related to such investment was found during the search. The assessee has paid booking advance of Rs. 20,00,000/- by Alc Payee Cheque 21.01.2006 drawn on lng Vyasa Bank to the builder. The assessee also paid amount of Rs. 1.80 Crore by cheque on 02.03.2006. The payrnents were made subject to the verification of the title of the property. The tile and the document of the property of builder were not proper. Thus, the builder returned the cheque on 08.05.2006. All the transactions were recorded in the books of account. During the recording of statement by authorized officer all facts were properly explained. The assessee nowhere admitted that the noting on the loose paper for admitting that any payment was made in cash in respect of the said property. The CIT(A) deleted the addition after considering the submissions and the facts of the case. 10. We have considered the submission of parties and perused the record. The AO during the assessment observed a loose paper annexed at page no-2 of B-l/9 was found. On perusal of loose paper, the AO observed that advance of Rs. 20,00,000/- and Rs.1.80 crore was paid by cheque. The AO construed the figure mentioned in loose paper .94 in cash equivalent to Rs. 94,00,000/-. Thus, the AO concluded that assessee paidRs.94,00,000/- in cash in respect of transaction with Embassy Group and made the addition of Rs. 94,00,000/- accordingly. We have seen that the AO made the addition on the basis of assumption or presumption that no agreement related with transaction of property was found in the search and that loose paper which were unnumbered has no evidentiary value. The Id. CTT(A) 'While considering the grounds of appeal discussed the issue in detail and passed the following order: "6.6 I have carefully considered the submissions of the AR of the appellant, the order of the AO and material on record On careful examination of the facts, it is seen that- the ownership of the seized paper 01 page No.2 annexed to Annexure B-l/9 is not in dispute. It is also not disputed that the entries depicted on the loose paper found and seized in the course of search action relates to the business affairs of the assessee firm. The transactions recorded in decimal figures on the said loose paper denote the figures in lakhs ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 13 and crores has also not been disputed by the assessee. In fact, Shri Ajay Saraf the managing partner of the firm, M/s RBSSN in his sworn statement initially recorded U/S 132(4) on 26.09.2010, while replying to question No.I7 had categorically stated that a cash of Rs. 94 lakhs has been made to M/s IDEB Builders, Bangalore and offered the same as additional income. the same being not have been accounted for by the assessee In his books of account. The relevant answer to question No.17 has been reproduced by the AO on- page No. 9 of the assessment order. On perusal of the answer 10 question No. 17, it clearly transpires that Shri Saraf in his reply has referred to the made by the firm in Sigma Grand Mall Towers 11770 sq.fi. by M/s IDEB Builders at Bangalore and this amount has also been offered for taxation by Shri Saraf in his statement u/s 132 (4) in respect of the transaction in Sigma Grand Mall Towers with IDEB Builders. 6.7 In his subsequent statement made u/s 131 on 27.10.2010, Shri Saraf has clarified that the reference made to the transaction with M/s IDEB Builders was not with reference to the transaction with MI5 Dynasty Developers Pvt. Ltd. of Embassy group, which according to Shri Saraf was cancelled subsequently The relevant reply to question No 3 of his statement recorded U/S 131 on 27.10.2010 is as under: "The said deal was with M/s Dynasty Developers Pvt Ltd. (Embassy Group), which was eventually cancelled. I had paid only Rs. 2 crores in cheque, which has been returned back to me. I am giving you a copy of ledger account in the books of RBSSN and copy of cheques with letter, showing the respective entries and the cancellation of deed." It is quite manifest from the above that Shri Saraf has categorically stated that he had paid only Rs. 2 crs. by cheque which has been received back pursuant to the cancellation of the transaction with M/s Dynasty Developers Pvt. Ltd of Embassy group. Shri Saraf has also furnished a copy of ledger account in the books of RBSSN along with the copies of cheques issued. 6.8 The above contention of Shri Saraf is also found in conformity to his initial statement deposed u/s 132(4) on 26.09.2010, wherein while replying to question No .16 -Shri Saraf has clearly stated that the contents written on the back side of the page No. IS of Annexure B-1121 relates to the discussion took place on 18.01.2006 and the said proposal never fructified. He thus clarified that no sale deed or agreement to sale has been registered in respect of Embassy or Bhatt building as mentioned in the said notings. The relevant question answer is reproduced below: Q.16 During the course of search at your office premises a project pad is being found from the drawer of your office table which is ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 14 inventorised as B-11i3. Please go through the contents written on the back side of page No. is of this book and explain the same? Ans: The contents written on back side of page no.15 relates to discussion on 181112006. All the proposals of the said discussion did not fructify. No sale deed or agreement to sale has been registered in respect of Embassy or Bhatt Building as mentioned in the said notings. 6.9 On close scrutiny of the reply of Shri Saraf to question No. 3 of his statement recorded u/s 131 on 27.10.2010 it is seen that a specific question was put to Shri Saraf to explain the total transaction of Rs. 2.94 crs. as borne out from the entries depicted on the seized paper annexed at B-1I21 and B-11I3. However, Shri Saraf In his reply has clearly deposed that he had paid only Rs. 2 crs. which has been received back as the transaction was never materialized with Embassy group. It is a fact as emanated from the records that the transaction of cheque payment of Rs. 2 crs. is found to "be reflected in the balance sheet of the appellant as on 31.03.2006 which is also appearing as opening balance as on 01.04.2006 until the entry of Rs. 2 crs. has been reversed by the assessee as on 08.05.2006 for the equivalent amount bringing the balance to NIL against the said Mls Dynasty Developers Pvt. Ltd. It is also a fact as emanated from the assessment order that cheques issued by the appellant were never en-cashed by Mls Dynasty Developers Pvt. Ltd. and returned back to the assessee in original. 6.10 It is an undisputed fact [hat the transaction oJ investment with M/s Dynasty Developers Pvt. Ltd has not been materialized. It is also a fact as emanated Jrom records that no sale deed or agreement for purchase of property with [he Embassy group was executed The AO in his order has recorded a dear finding that the cheques issued by the appellant for Rs. 2 crs. have been returned back by M/s Dynasty Developers Pvt. Ltd. the transaction was cancelled This fact is also found in conformity that the cheques issued were returned back to the appellant in original without en- cashment. Thus there exists no dispute as regards to the cancellation of the transaction between the appellant and MIs Dynasty Developers Pvt. Ltd. However, the only dispute relates to the cash payment of Rs. 94 lakhs with reference (0 the entry mentioned on the seized paper being 8-1/9. B-112/ and B-1113. The MAO while relying on the reply to the question No. 17 of statement of Shri Ajay Saraf recorded u/s 132(4) on 26.09.2010 has inferred that the appellant has paid the cash of Rs. 94 lakhs to Mls Dynasty Developers Pvt. Ltd. In this regard the Ld. A 0 in last para of page No. 1 0 has further recorded a finding that "in fact in 'mistaken belief' he has accepted that the cash of Rs. 94 lakhs was given". Thus the AO concluded that appellant has 'paid I he cash of Rs. 94lakhs as mentioned on the seized paper. However, on close scrutiny of the relevant question answers No. 17, 3 & 16 statement recorded deposed by Shri Saraf u/s 132(4) on 26.09.2010, it is seen that Shri Saraf has that he had paid only Rs. 2 crs. been returned ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 15 back as the transaction was not materialized with Mls Dynast Developers Pvt. Ltd. Further that the cash payment referred in reply to question No.17 relates 10 the transaction with Mls IDEB Builders, Bangalore and not in respect of the transaction with Mls Dynasty Developers Pvt. Ltd. Therefore. the conclusion drawn by 'he Id.AO that the appellant had confessed of having made cash payment of Rs. 94 lakhs to MI5 Dynasty Developers Pvt. Ltd. of Embassy group, Bangalore is not correct to that extent. 6. 11 The contention of the AR of the appellant that the Ld.AO has merely relied on the rough noting made on a dump paper without bringing on record any corroborative evidence la show that the appellant had actually made the payment of cash of Rs. 94 lakhs as per the rough jottings mentioned on the seized paper, carries substantial force. The transaction in question with MIs Dynasty Developers Pvt. Ltd. was not materialized and there is no evidence on record to corroborate the fact that the appellant had actually paid Rs. 94 lakhs in cash over and above the Rs. 2 crs. paid by cheque. The appellant has brought ample evidences on rec*brd £0 demonstrate that he had paid Rs. 2 crs. by cheque which is received back However, there is no corroborative evidence to show (hat the appellant has paid cash. The inference drawn by AO that the cash must have been paid at the lime of agreement is also a presumption as no agreement as such found or seized in the search action in respect of the transaction in question. Thus according to the AR the notings of the deal on a loose paper sheets which un- numbered have no evidentiary value unless corroborated by any independent evidence. The AR thus pleaded that there exists independent evidences as regards to the payment made and received back of Rs.2 crs. by cheque but there is no material 10 indicate that cash was paid or received hack by the appellant, The AO has never tried to investigate the matter or cross verify the payment made with Mls Dynasty Developers Pvt. Ltd. before treating the noting on a rough and dump paper as undisclosed income of the appellant. On close scrutiny of the notings on the loose paper, it is seen that nowhere in the notings on the loose papers it is mentioned that cash was paid and no date is also mentioned therein. The AR thus vehemently argued that as per the principle laid down by the Apex Court that bare suspicion cannot be a foundation of the assessment, In this regard it is significant to note that a letter dated 02,03.2006 written by Shri Ajay Saraf to Mls Dynasty Developers Pvt. Ltd. was found and seized in the course of search action. On perusal of the letter it is seen that it mentions about the cheque of Rs.1.80 crs. drawn by the appellant in favour of said Mls Dynasty Developers Pvt. Ltd. over and above the advance paid of Rs.20 law, by cheque as mentioned on the seized paper No. B-J/9. Thus in this hand written letter Shri Ajay Saraf had clearly written that the payment of Rs. 1. 80 crs. is being made subject to the procurement of the relevant documents pertaining to the transaction and in case of any defect in the documents, refund has to be made to appellant. This letter written by Shri Saraf in ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 16 connection with the transaction in question with the nowhere refers to any cash payment made received by the appellant. 6.12 The AR of the appellant in support of his contentions has relied on the following decisions: JAYANTI LAL PATEL vs. ACIT. (1998) 233ITR 588 (Raj) Held that no addition on account of entries on a piece of paper which is claimed to have been found at the time of search, can be made, treating the figures as investment for. purchase of plot, M. M. FINANCIERS (P) LTD. vs. DY CITITAT, CHENNAI ' B' BENCH (2007) 107 TTJ 200i - Held that no addition could be made in the hands of assessee on the basis of the dumb loose slips seized from his residence, in the absence of any corroborative material to show payment of any undisclosed consideration by the assessee towards purchase of land. [TO Vs Mannalal Jhalani ITA No. 250 TO 260IJP/1998) 22 Taxworld 551 [TAT Jaipur. It was held that addition cannot be made simply on recovery of some papers found and seized during the course of search without making necessary verification and examination. Mohd. Illias Cholldhary Vs DCIT 25 Tax World 394 [TAT Jaipur. It was held that the addition cannot be justifiably be made as undisclosed income on the basis of certain entries found recorded on a seized paper without making any inquiry and investigation and without examining the assessee. Moonga Metals .Pvt. Ltd., Vs. ACIT (All.) 67 TT J 247 Burden is on to establish that figures appearing on loose papers found represent undisclosed investment of the Assessee." 6.1.3 Thus after taking into consideration all the cumulative material facts, and the judicial decisions relied upon by the AR of the appellant, 1 am of the considered opinion that the addition made by AO of Rs.94 lakhs on the basis of loose paper notings on a dump paper in the absence of any corroborative evidence is not justified. therefore, [he addition is directed to be deleted. 11. Considering the finding of the Id. CITCA) passed the order after considering the fact properly on the basis of fact explained before the authorized officer as well as during the appellate proceeding. Thus, we do not find any illegality or infirmity in the order passed by Id. CIT(A). No contrary decision was brought to our notice to take a different view. Thus, the ground no. 1 raised by Revenue is dismissed. ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 17 13. Ld AR further mentioned that since this issue has reached its finality in the case of M/s R.B. Seth Shriram Narsingdas (supra) where addition was made on substantive basis, also the department has not preferred any appeal before the Hon’ble High Court on the same, the finding of the Ld CIT(A) in the case of assessee are deserve to be uphold. 14. Regarding addition of Rs. 2.00 on protective basis by the Ld AO in the hands of the assessee which has been reversed by the Ld CIT(A), the Ld DR vehemently supported the order of Ld AO and prayed that order of the Ld CIT(A) is erroneous so far as the issue is yet to be decided by the ITAT in the hand of spouse of the Assessee where this addition was made on substantive basis, therefore order of CIT(A) is liable to be quashed on this ground. 15. Ld AR on the contrary has supported the order of CIT(A), wherein this issue is decided in favour of the assessee by observing that:- 5.2 I have carefully considered the submission of the AR of the appellant, order of the AO and material on record. The AO has made additions on protective basis in the case of appellant on the ground that the appellant has made the disclosure but the property has been purchased in the name of her wife Smt Anju Saraf. Further addition on substantive basis has been made by AO in AY 2009-10 in Smt Anju Saraf. In my order passed in Smt Anju Saraf, I have already discussed and held that the payment of Rs.2,00,00,000/- has been made for acquisition of property in Regency bliss and the view taken by the AO is logic~l and the additions made by the AO cannot be disturbed. Since the addition of Rs. 2,00,00,000/- made in Smt Anju Saraf by the AO has been sustained by me , the addition made in the case of appellant needs to be deleted. I therefore direct the AO to delete the addition of Rs.2,00,00,000/-. This ground is therefore allowed. ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 18 16. We have heard the rival contentions. Perused, orders of the revenue authorities. Also, we have carefully comprehended the order of coordinate bench of the ITAT Nagpur in the case of M/s R.B. Seth Shriram Narsingdas (supra), wherein overall facts of the issue and observations of the Ld CIT(A) were considered. Also in the case of Spouse of the assessee Mrs Anju Saraf wherein the same addition was made on substantive basis in appeal number ITA No.499/NAG/2016 coordinate bench has decided this issue in favour of the assessee, hence this addition made on the protective basis on the assessee cannot survive. Consequently, Following the decisions of the coordinate bench of the ITAT and after going through the facts of the case carefully we are of the considered opinion that Ld CIT(A) has decided the impugned issues properly for both the years and adjudicated the matter correctly and lawfully. Therefore, we also uphold the decision of the Ld CIT(A) on this issue and dismiss this ground raised by the revenue. 17. The next ground is regarding undisclosed income in respect of cash paid for various unexplained expenditure Ground Disallowance AY 2011-12 3rd Undisclosed income in respect of cash paid for Various unexplained expenditure Rs. 84.20 Lac (Protective Basis) (Ground 1) 18. This issue is raised by the revenue against order of Ld CIT(A) for the AY 2011-12. 19. Ld CITDR started his arguments by supporting the contentions of the Ld AO and took us to the order of Ld AO where in 3 additions for Rs. 77.60Lac + Rs. 4.00 Lac + Rs. 2.60Lac collectively aggregated to Rs. ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 19 84.20 Lac were made on the assessee on protective basis and substantive additions were made on partnership firm M/s R.B. Seth Shriram Narsindas. Ld CITDR further submitted that since the additions were made on the basis of seized material after admission of the same by the assessee to offer this unexplained cash payments as additional income, there is no infirmity in the finding of the Ld AO and deserves to be upheld. Finding of the LD CIT(A) on this issue is perverse as far as the assessee himself has accepted the additional income on this count and had not brought on record any documentary evidence in support of its claim that there was no such expenditure in cash during the assessment proceedings. Therefore order of Ld CIT(A) needs to be annulled and order of Ld AO ought to have reinstated. 20. Ld AR of the assessee on the other hand has submitted that since the impugned additions were made by the Ld AO on protective basis on the assessee and this issue which was added on substantive basis has already been disposed off in favour of partnership firm M/s R.B. Seth Shriram Narsindas by the coordinate bench of ITAT Nagpur vide ITA 212/Nag/2015 dated 27.12.2017. Ld CIT(A) has also rightly deleted the addition in assessees case, observing as under:- The ld. AR also brought on record the order of CIT(A)(III) dated 23/0/2015 in the case of M/s RBSSN, wherein addition of Rs.84.20 Lakhs made on substantive basis has been deleted both on merits and legality. Thus after taking into consideration all the cumulative material facts, appellants submission and the judicial pronouncements relied upon by the AR of the appellant, I am of the considered opinion that the addition made by AO of Rs.84,20,000/- is not justified. The addition of Rs.84,20,000/- is therefore directed to be deleted. This ground is therefore allowed. ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 20 21. Ld AR plead that order of the LD CIT(A) on this ground needs to be upheld. 22. On this issue, we have heard the rival contentions, perused the material available on records, orders of the revenue authorities and Order of the ITAT, Nagpur. Since, this issue has already examined, discussed at length and has decided in favour of the assessee by the coordinate bench of the ITAT Nagpur in the case of M/s R.B. Seth Shriram Narsindas in ITA no. 212/Nag/2015 dated 27.12.2017, wherein the same addition was made on substantive basis, the issue is squarely covered. No contrary facts, observations or decision were brought to our knowledge by the revenue to have a different view. Consequently, this ground of appeal of revenue is dismissed. 23. The next two grounds are related to unexplained cash found during the search Ground Disallowance AY 2011-12 4th Cash found during the search Rs. 112.61 Lac (Protective Basis) (Ground 2) 5th Cash found during the search at home and in Locker Rs. 10 Lac (Protective Basis) (Ground 3) 24. Ld CITDR has vehemently supported and relied upon the order of AO and reiterated the same with a plea that order of the Ld CIT(A) granting relief to the assessee on these additions is a gross error and illegal being the issues raised are contested by the assessee in RBSSN groups case on substantial basis and are yet not reached the finality. ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 21 25. Ld AR of the assessee relied upon the findings by the CIT(A) which reads as under: 7.2 I have carefully considered the submission of the AR of the appellant, order of the AO and material on record. The AO has made addition of Rs.1,12,61,153/- on substantive basis in partnership firm M/s.RBSSN & on protective basis in the case of the appellant. During search action on 24/09/2010, cash of Rs.1,14,90,140/- was found from the business premises of M/s RBSSN, wherefrom the other sister concerns also carry on their business operations. I find that while recording statement u/s.132(4), Mr. Ajay Saraf Managing partner of M/s.RBSSN, was asked to explain cash of Rs.94,29,214/- found in excess as compared to the cash in hand as per books of accounts of all the entities including individuals. It is therefore an undisputed fact, that cash of Rs.20,60,926/- (Rs.1,14,90,140 - Rs.94,29,214) is the cash in hand as on 24/9/2010 as per books of accounts of sister concerns & individuals which was explained d ring search itself. The cash found during search was therefore inclusive of cash in hand of its sister concerns & individuals. The contention of the Ld.AR that the investigation authorities had accepted the cash of Rs.20,60,926/- as explained and accounted and had therefore asked Mr.Ajay Saraf to explain only remaining cash of Rs.94,29,214/- is therefore correct. The AO therefore was not justified in not considering the cash as per the books of accounts of its sister concerns and individuals including that of firm at Rs.20,60,926/-. The appellant in his submission before AD and me has accepted that the excess cash found during search belonged to the firm M/s.RBSSN in which the appellant is partner. The AD has not brought on record any incriminating evidence/material found during search to show that the appellant has earned any income outside the books of accounts or the cash belongs to the appellant. On the contrary, the AO in his order on Page 9 has himself accepted that the cash found during search pertains to the firm M/s.RBSSN. The Ld.AR also brought & placed on record the order of CIT(Appeals) IF dated 27/03/2015 in the case of M/s:RBSSN wherein addition was made on substantive basis. The CIT(Appeals) III has given relief of Rs.20,60,926/- (including cash of firm of Rs.2,28,987/-) and confirmed balance addition of Rs.94,29,214/- on account of unexplained cash as the same belonged to the firm M/s.RBSSN. Thus after taking into consideration all the cumulative material facts, ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 22 appellants submission and the judicial pronouncements relied upon by the AR of the appellant, I am of the considered opinion that the cash found belongs to the firm M/s.RBSSN and hence addition of Rs.1,12,61,153/- made by AD on protective basis ,in the case of appellant is not justified. The addition of Rs.1,12,61,153/- is therefore directed to be deleted. This ground is therefore allowed. x x x x x x x 8.2 I have carefully considered the submission of the AR of the appellant, order of the AO and material on record. The addition of Rs.l0 Lakh has been made on protective basis in the case of the assessee. I find that the appellant in his submission before AO and me accepted that the cash found in residence and locker belonged to the firm M/s.RBSSN in which the appellant is partner and the same was withdrawn by the appellant from the firm. Since the cash belonged to the firm but was found in residence &. locker of the appellant, it is obvious that the cash was withdrawn by the appellant and kept there. The AO has not brought on record any I incriminating evidence/material found during search to show that the appellant has earned any income outside the books of accounts or the cash belongs to the appellant. On the contrary, the AO in his order on Page 10 has himself accepted that the cash found during search pertains to the firm M/s.RBSSN. The Ld.AR also brought & placed on record the order of CIT(Appeals) III dated 27/03/2015 in the case of M/s.RBSSN. I find that the addition of Rs.10,00,000/- made on substantive basis on account of unexplained cash has been confirmed by CIT(Appeals) III as the cash belonged to the firm. Thus after taking into consideration! all the cumulative material facts & appellants submission, I am also of the considered opinion that the cash found belongs to the firm M/s RBSSN and hence addition of Rs. 10,00,000/- made by AO on protective basis in the case of appellant is not justified. The addition of Rs 10,00,000/- is therefore directed to be deleted. This ground is therefore allowed. 26. Ld AR also submitted that Hon’ble ITAT Nagpur Bench in M/s R.B. Seth Shriram Narsinghdas vide its order in ITA No 212/Nag/2015 dated 27.12.2017 (Kindly refer page No 29 of Paper Books) has upheld the Ld. CIT-Appeals order for deletion of 20,60,926/- and dismissed the appeal filed by the revenue. Balance addition of Rs. 94,29,214/- has been ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 23 confirmed by the CIT(A) in the order dated 23.03.2015, which is being contested and pending before the Hon’ble Bench of ITAT. 27. We have considered the rival submissions and contentions, perused the orders of authorities below. Considering, facts of the case and the findings of Ld CIT(A) on the impugned issue, on which no other contrary facts or decision were brought by the revenue to our notice for taking a different view. Thus, we do not have any reason to interfere in the findings of the Ld CIT(A). Consequently, these grounds of appeal of the revenue are dismissed. 28. Since we have upheld the order of the CIT(A) in deleting the additions made by the AO for the respective assessment years under consideration in the respective appeals before us, therefore, the cross objections filed by the assessee against the respective appeals of the revenue, supporting the order of the CIT(A), become infructuous and accordingly the same are dismissed. 29. In the result, all the appeals filed by the revenue and cross objections filed by the assessee are dismissed. Order pronounced under Rule 34(4) of ITAT Rules, 1963 on 25/07/ 2022. Sd/- (SANDEEP GOSAIN) Sd/- (ARUN KHODPIA) न्याययक सदस्य / JUDICIAL MEMBER लेखा सदस्य / ACCOUNTANT MEMBER नागप ु र Nagpur; दििाांक Dated 25/07/2022 Prakash Kumar Mishra, Sr.P.S. ITA Nos.506, 508&509/NAG/16 & CO Nos.11, 13&14/17 24 आदेश की प्रयिललपप अग्रेपिि/Copy of the Order forwarded to : आदेशान ु सार/ BY ORDER, (Assistant Registrar) आयकर अपीलीय अधिकरण, नागप ु र /ITAT, Nagpur 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. ववभागीय प्रनतनिधर्, आयकर अपीलीय अधर्करण, नागप ु र / DR, ITAT, Nagpur 6. गार्ा फाईल / Guard file. सत्यावपत प्रनत //True Copy//