RASHMI AMEYA DEVELOPERS HOUSING & ESTATE REALTORS P. LTD., PALGHAR V. ACIT, CENTRAL CIRCLE-3, THANE

ITA 1990/MUM/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5713 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 09-12-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SUBHODH RATNAPARKHI
• Keywords: Capital asset; Search and seizure; Document seized; Deemed to accrue or arise in india; Additional evidence; Corroborative evidences; Documents seized
• Section: 132; 153A; 201; 139(1); 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 1990/MUM/2020 Assessment Year: 2011-12 & ITA No. 1991/MUM/2020 Assessment Year: 2012-13 & ITA No. 1992/MUM/2020 Assessment Year: 2013-14 & ITA No. 1993/MUM/2020 Assessment Year: 2014-15 & ITA No. 1994/MUM/2020 Assessment Year: 2015-16 Rashmi Ameya Developers Housing & Estate Realtors Pvt. Ltd., D II, 01 02, Akanksha Commercial Complex, Opp. Sajavat Complex, Achole Road, Nallasopara, Dist. Palghar-401 203. Vs. ACIT, Central Circle-3, 6 th floor, Ashar IT Park, Road No. 16Z, Wagale Industrial Estate, Thane-400 604. PAN No. AAECR 8508 H AppellantRespondent Assessee by:Mr. Subhodh Ratnaparkhi, AR Revenue by:Mr. Prabhat Kumar Gupta, CIT-DR D a t e o f H e a r i n g:28/02/2022 D a t e o f p r o n o u n c e m e n t:30/03/2022 Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 2 ORDER PER OM PRAKASH KANT, AM These five appeals by the assessee are directed against a consolidated order dated 23/03/2020 passed by the learned Commissioner of Income-tax (Appeals)-Pune [in short the Ld. CIT(A)] for assessment year 2011-12 to 2015- 16. As common issue in dispute is involved in these appeals, same were heard together and disposed off by way of this consolidated order for convenience and avoid repetition of facts. 2.Briefly stated facts of the case that : (i)the assessee company was incorporated on 26/05/2010 and was engaged in the business of purchasing land and development thereof and further sale of land along with the FSI or only FSI to the builders, at Gokhivare, Tal- Vasai, Distt. Thane (Maharastra). (ii)A search and seizure action under section 132 of the Income Tax Act, 1961 (in short ‘the Act’) was carried out on 31/07/2014 at the premises of M/s Maad Realtors and infra Ltd, Achole Road Nalasopra (Maharashtra). During the search, documents belonging to the assessee were found and seized. Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 3 Accordingly, after recording due satisfaction in terms of section 153C of Act, the Assessing Officer issued notice under section 153A real with section 153C for assessment year 2011-12 to 2014-15. The assessment year 2015-16, being search year, was considered for regular scrutiny assessment. The assessee filed return of income in response to notice under section 153A read with section 153C in respect of assessment year 2011-12 to 2014-15 and filed regular return of income for assessment year 2015-16. The Assessing Officer commenced assessment proceeding for the assessment years from 2011-12 to 2015-16. (iii)The Assessing Officer noted that loos paper No. 25 of bundle No.-1 (one), seized from the office premises of M/s Maad Realtor and infra Ltd revealed unaccounted cash receipt on sale of FSI amounting to ₹59,23,77,100/-received by the assessee along with cheque payment. The Assessing Officer has reproduced contents of the said paper on page 3 of the impugned assessment order. The said document contained details of name of party from whom payment was received, area of land, rate of land, sale value, date of first payment and Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 4 last payment in respect of sale, cheque amount, cash amount and total money received. (iv)Shri Anil Gupta, director of the assessee company in his statement recorded under section 132(4) of the Act admitted that cash received on sale of FSI was not recorded in the regular books of accounts and offered ₹38,50,00,000/-for taxation in the hands of the assessee company. (v)The Assessing Officer after considering submissions of the assesseeandinviewoftheundisclosedincomeof ₹38,50,00,000/-offered voluntarily during course of the search, though not declared in the return of income filed under section 153C, assessed the cash received totalling to ₹59,73,77,100/- with assessment year -wise breakup as under: AY 2011-12 (₹38,30,00,000/-); AY 2012-13 (Rs.7,93,77,100/-); AY 2013-14 (Rs. 10,00,000/-); AY 2014-15 (₹6,20,00,000/-) and AY 2015- 16 (₹7,20,00,000/-). The Assessing Officer considered receipt of cash in the previous year relevant to the assessment year, in which first payment for sale Land/FSI was received by the assessee and accordingly made addition for unaccounted cash in relevant assessment years. Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 5 (vi)On further appeal, the Ld. CIT(A) considered the objections raised by the assessee. Before the Ld. CIT(A) the assessee claimed that cheque and cash mentioned in the said document was received by the assessee as advance against proposed sale of FSI or land which was yet to be purchased and developed. The assessee submitted that amount received through cheque was duly recorded in the books of accounts of the assessee as advance as such amount were liable to be taxed only in the year of the sale of FSI/development rights on execution of registered development agreement in favour of the purchasers and therefore same had not accrued as income in view of mercantile method of accounting followed by the assessee. The assessee submitted that Sh Anil Gupta erroneously declared income when there was no income had actually accrued to the assessee. (vii)The Ld. CIT(A) however held that cash receipts were not entered in the regular books of accounts and therefore character of the same was of income in view of the inclusive definition of income under section 2(24) of the Act further supported by decision of the Hon’ble Supreme Court in the case of CIT Vs Karthikeyan (GR) (supra). The Ld. CIT(A) accordingly Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 6 upheld the finding of the Assessing Officer of treating the cash component as unaccounted income in relevant assessment year. (viii)The assessee also filed additional evidences in support of the claim that amount (cheque as well cash) received from two parties namely Sh. Pravin Jain (Marwadi) and Sanjay Agrawal were returned to them. The Ld. CIT(A) forwarded the ledger accounts of these parties maintained in the books of accounts of the assessee, which were filed as additional evidence, to the Assessing Officer, who objected admission of the additional evidence but given his comment on merit also. The Ld. CIT(A) after considering remand report of the Assessing Officer held that additional evidences failed to establish return of amount by those two parties. (ix)The assessee also filed additional evidence that cheque as well as cash consideration has been offered as sales in assessment year 2016-17 in subsequent years to tax with respect to sale transactions which attend finality. The assessee filed ledger extracts and Income Tax return of M/s Raj Enterprises as supporting evidences. The Assessing Officer objected for Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 7 admission of the evidences as same were not filed before him. The Ld. CIT(A) held that evidences are related to period much after the date of the search and therefore cannot be accepted to justify the events prior to search. Accordingly declined to admit, the additional evidences in respect of ‘Raj Enterprises’. (x)The Ld. Assessing Officer made the addition of cash received in the assessment year corresponding to first payment for sale of land/FSI, whereas the Ld. CIT(A) is of the view that said addition of cash received should be made in the assessment year corresponding to last payment of sale of land/FSI recorded in the seized document. The Ld. CIT(A) accordingly, directed the Assessing Officer to sustain addition of cash component of sale of land/FSI in the previous year relevant to the assessment year in which last payment has been recorded as received. 3.Aggrieved with the finding of the Ld. CIT(A), the assessee is an appeal in all the five assessment years beginning from assessment year 2011-12 to 2015- 16. The assessee has raised identical grounds of the appeal in all the assessment years, except difference of amount of the addition. In assessment year 2013-14 Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 8 to assessment year 2015-16, the assessee has also raised ground challenging enhancement of income by the Ld. CIT(A). For brevity, we are reproducing only the grounds raised by the assessee in assessment year 2011-12 as under: 1.On the facts and in law, the Hon. CIT(A) erred in upholding the addition of ₹5,50,00,000/- as undisclosed income, on account of certain entries of cash receipts found recorded on seized paper no.25 of bundle no. 1 (Party A-2) and seized paper no. 22 of bundle no. 1 (Party A-14) found during the course of search action us 132, not appreciating that the concerned transactions were advances received towards proposed sale of FSI/land at village Gokhivare, Taluka Vasai, District Palghar and did not result in any "income" liable for tax in the hands of the appellant in the year under appeal and therefore the addition was not justified. 2.On the facts and in law, the Hon. CIT(A) erred in not admitting the additional evidences produced during appeal proceedings u/r 46A of the I. T. Rules 1962, not appreciating the sufficient cause due to which these evidences could not be produced before the assessing officer, thereby denying the appellant a fair chance to justify its claim with regards to the nature of transactions recorded on the concerned seized documents. 3.1The ground challenging enhancement of income raised in assessment year 2013-14 is reproduced as under: 1.On the facts and in law, the Hon. CIT(A) erred in holding that the sum of Rs.18,13,77,100/- was the undisclosed income of the appellant, on account of certain entries of cash receipts found recorded on seized paper no.25 of bundle no. 1 (Party A-2) and seized paper no. 22 of bundle no. 1 (Party A-14) found during the course of search action ws 132, not appreciating that the concerned transactions were advances received towards proposed sale of FSI/land at village Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 9 Gokhivare, Taluka Vasai, District Palghar and did not result in any "income" liable for tax in the hands of the appellant in the year under appeal and therefore the addition to the returned income was not justified. 2.On the facts and in law, out of total addition of Rs.18,13,77,100/- made as per the directions of the Hon. CIT(A) as undisclosed income based on seized documents, addition of Rs.18,03,77,100/- is on account of enhancement of assessment by the Hon. CIT(A) but without granting the appellant any opportunity of show causing against such enhancement and therefore such enhancement of income does not comply with the provisions of section 251(2) of the I. T. Act, 1961 and is invalid by law, thereby requiring such enhanced income of Rs.18,03,77,100/- to be deleted. 3.On the facts and in law, the Hon. CIT(A) erred in not admitting the additional evidences produced during appeal proceedings ur 46A of the I. T. Rules 1962, not appreciating the sufficient cause due to which these evidences could not be produced before the assessing officer, thereby denying the appellant a fair chance to justify its claim with regards to the nature of transactions recorded on the concerned seized documents. 3.2Grounds raised by the assessee in all the five years are summarized in the table below: Asst.yrs. (ITA No. 2011-122012-132013-142014-152015-16 AGrounds of appeal (issues) (i)Addition of ₹5,50,00,000/- asperseized paper (ii)Additional evidencesnot admitted (i)Addition of ₹2,65,00,000/- as per seized paper (ii)Additional evidencesnot admitted (i)Additionof ₹18,13,77,100/- as per seized paper (ii)Enhancementof ₹18,03,77,100/- by CIT(A) not appropriate (iii)Additional evidences not admitted (i)Additionof ₹20,05,00,000/- as per seized paper (ii)Enhancementof ₹13,85,00,000/- by CIT(A) not appropriate (iii)Additional evidences not admitted (i)Additionof ₹20,12,46,873/- as per seized paper (ii)Enhancementof ₹6,20,00,000/- by CIT(A) not appropriate (iii)Additional evidences not admitted BIncome Position I II III Returned income 1,72,600/- 38,30,00,000/- NIL 7,93,77,100/- NIL 10,00,000/- NIL 6,20,00,000/- 6,72,46,873/- 7,20,00,000/- Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 10 IV V Addition by ld. AO in asst. order Total Addition /(-) deletionas per direction ofHon. CIT(A)in appeal order dt. 23.03.2020 Assessed income after order of Hon. CIT(A) 38,31,72,600/- (- )32,80,00,000/- 7,93,77,100/- (- )5,28,77,100/- 10,00,000/- 18,03,77,100/- 6,20,00,000/- 20,05,00,000/- 13,92,46,873/- 20,12,46,873/- 5,51,72,600/-2,65,00,000/-18,13,77,100/-20,05,00,000/-20,12,46,873/- VIBreakupof assessed income (a)Returned income 1,72,600/-NILNILNIL6,72,46,873/- (b)Addition sustained by CIT(A) 5,50,00,000/-2,65,00,000/-10,00,000/-6,20,00,000/-7,20,00,000/- (c)Addition enhanced by CIT(A) --18,03,77,100/-13,85,00,000/-6,20,00,000/- 4.Before us the Ld. counsel of the assessee has filed a paperbook containing page 1 to 344. 5.We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. 5.1In support of ground no. 1 of the appeal, the Ld. counsel of the assessee relied on the submissions made before the Ld. CIT(A) and reiterated that the cash component recorded in the relevant seized document was only an advance, which did not accrue as income in the hands of the assessee in relevant assessment year and therefore making any addition by the Assessing Officer Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 11 and confirming the same by the Ld. CIT(A) is against the provisions of the Income Tax Act. He further submitted that when a part of the sale proceeds received by way of cheque has been accepted by the Assessing Officer as advance against the transaction of sale of Land/FSI, then he is not justified in treating the cash component of same transaction as income in the hands of the assessee in the year under consideration. He submitted that at the time of registration of land/FSI, the assessee has already declared the sale proceeds of the transaction including the cash component and therefore making the addition in the year under consideration will amount to taxing the same amount twice, which is not permitted in law. 6.The Ld. Departmental Representative (DR) on the contrary relied on the order of the lower authorities and submitted that cash component received was not recorded in the books of accounts. Therefore, it was not in the nature of income to be assessed under the head “profit and gains of the business”, in accordance with the method of accounting followed by the assessee. Whereas, this being cash received based on incriminating material, which has not been entered in books of accounts for the last five years, has to be considered as deemed income under the inclusive definition of income under section 2(24) of the Act. Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 12 7.We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The Ld. CIT(A) has decided three issues in respect of the cash receipt. Firstly, according to him the cash receipt are not in the nature of advance but same are undisclosed income not recorded in books of accounts and therefore cannot be taken into consideration while working out profit and gains of business following the consistent mercantile method of accounting. Secondly, the Ld. CIT(A) rejected the additional evidence in the form of income declared in subsequent years on the basis of cash component of transactions recorded in seized document. Thirdly, the Ld. CIT(A) has directed the Assessing Officer to assess the cash receipt in the year of last payment received against transaction of sale of land/FSI recorded in seized document. 7.1On the first issue of nature and character amount received in cash, the Ld. counsel of the assessee submitted as under: “3.1During the course of proceedings before lower authorities, it was explained that appellant being in the business of land development as a colonizer, follows mercantile system of accounting. The appellant explained to Id. AO that the relevant seized papers record summary of FSI to be sold to the prospective buyers on getting approval of the land layout at Gokhivare. The appellant company had received advances in cash & cheques from the prospective buyers, which is part of business receipts, but in the nature of Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 13 advance only. According to the accounting policy followed by the appellant, the said receipts are liable to be taxed in the previous year in which the sale of FSI/development rights actually takes place on execution of registered development agreement in favour of the purchasers. The appellant explained that till 31.03.2015, not a single instance of sale of FSI/development rights had materialized. All relevant evidences were placed on the record of the ld. AO. It was therefore pointed out that the amounts received by the appellant by way of cash/cheques were in the nature of advances only and therefore not liable to tax on the basis of receipt. The appellant also pointed out that the declaration made by Shri. Anil Gupta, director of the appellant during the course of search action was erroneous and not in line with the provisions of the Income Tax Act, 1961, wherein what can be brought to tax is the income of the appellant and not receipt of funds. 3.2The appellant reiterates that merely accepting advances for proposed sale does not by itself constitute income in the year of receipt, as one has to first ascertain the cost of FSI and after deducting infrastructure cost which includes solar light, concrete road, precast, RMC, Escalator, Drainage, SP etc. as per terms and conditions of commencement certificate and development charges payable to local authority, profit figure can be arrived. Such profit (income) can be brought to tax in the year of sale of FSI/development rights.” 8.The Ld. DR on the other hand relied on the finding of the Ld. CIT(A), which is reproduced as under: “20.The other issue to be examined. is if the cash receipts which are admittedly unaccounted in the regular books of accounts, On the peculiar facts and circumstances of the case, may partake the character of 'income'. The AO has mentioned that the cash receipts are admittedly outside the books of accounts and they are neither accounted sale proceeds nor accounted advances. Once a Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 14 transaction or a part of the transaction is outside the books of accounts, it cannot be assessed as per the, method pf accounting regularly followed by the assessee. The income tax Act has given an inclusive definition of income as per Sec. 2(24) of the Act. The Supreme Court in CIT v Karthikeyan (G.R) (1993) 201 ITR 866 (SC) has held that the purpose of the inclusive definition is not to limit the meaning but to widen its net, and the several clauses therein are not exhaustive of the meaning of income; even if a receipt did not fall within the ambit of any of the clauses, it might still be income if it partakes of the nature of income. The IT Act (Sec. 145) provides that income chargeable under the head Profits and Gains of Business or Professión or Income from Other Sources shall be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Income is brought to tax either on accrual basis or on receipt basis, as per the method of accounting regularly employed by the assessee. The issue therefore is can the income detected during the course of search and survey be treated differently from the income earned from business in the ordinary course. 21.As per the provisions of s. 5(1)(b) of the Act, when income accrues or arises or is deemed to accrue or arise to an assessee during the previous year, it is to be taxed in that year. The relevant yardstick is the time of accrual or arisal for the purpose of taxation, viz., in order to be chargeable, the income should accrue cr arise to the assessee during the previous year. There must be a right to receive the income on a particular date. In the case of the appellant, the receipt in cash in respect of the land or FSI of the nature of on money was a complete transaction in itself, as the same was not entered in the books of accounts. The appellant assessee on receipt of the cash had full control over the money. There is no evidence of any associated liabilities to the cash receipts. The rate at which the properties are shown to be booked are indicative of the fact that the committed liabilities are only towards the cheque considerations and that the cash component of the consideration have already been materialized. As the appellant had not disclosed the cash in books of accounts, it could not have been Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 15 assessed, had there been no search leacing to detection. Under the circumstances, the cash receipts had taken the character of "income' for the appellant, as the appellant had complete ownership over the cash receipts without any associated liabilities. Thus it is held that there are two 'taxable events' for each transaction of sale of parcel of land as per the document seized under reference: The cash transaction which is out of the books and the cheque transaction which is as per the regular books. Settled principles of taxation junsprudence treat assessment year a separate unit and income of each assessment year has to be determined in that particular year. AO or the assessee is barred from postponing or advancing the income. Certain exceptions are there when expenses of earlier year can be allowed in subsequent year or uncrystallized income can be taxed in subsequent year on happening of certain event. In the case under consideration, accrual of income has taken place on account of receipt of unaccounted cash by the. appellant. So, it was the duty of the assessee to offer the same for the years under appeal. There was no justification of any kind to postpone it. It is also a fact that the assessee is following mercantile system of accounting and as per that system it had to show the accrued income in the year of accrual. Further, there is nothing on record either in the form of seized documents or-claim subsequently made by the appellant during the course of the assessment or in appeal based on any evidence that there were expenditure incurred by the assessee which was relatable to the cash receipts, but which was not accounted. in the regular books of accounts. In absence of any such claim, no benefit of the unrecorded expenses can be given to the appellant as per the accounting system. Thus under the facts and circumstances of the case, on money received by the assessee outside the books of accounts are held to partake the character of income.” 9.On-going through the arguments of the parties, we find that there is no dispute as far as the amount recorded in seized document mentioned as cash Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 16 receipt. The assessee is not disputing that said amount stated in the seized document was received from the parties mentioned therein. The contention of the assessee is that it was engaged in developing the land and further sale of such land to prospective buyers/builders. It is argued on behalf of the assessee that said amount of the cash received is advance against proposed sale of land/FSI by the assessee and the sale has not been materlized or registered for stamp duty, therefore, the nature and character of the cash received remained as ‘advance’ only. According to the Ld. counsel, the assessee is following mercantile method of accounting and therefore the amount of advance shall be accounted as income as and when accrue on registered deed of sale of land or FSI. The Ld. CIT(A) has already rejected this contention of the assessee. We also find that in the seized document amount have been stated to be received in cheque as well as in cash. The cheque amount is duly entered and recorded in books of account of the assessee as advance received from respective parties for proposed sale of Land/FSI, but the cash amount recorded in the seized document has not been entered in the books of accounts. Such cash has been received in respect of previous years relevant to assessment year 2010-11 to AY 2014-15 but the assessee has not made an entry in the books of accounts for any of those assessment years. This conduct of the assessee shows that the assessee was not having any intention of disclosing this amount of the cash Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 17 received for offering as income in the year of registration of sale of land/FSI as this has happened not only in one year but consequently for six years the assessee has not entered the cash component received in its books of accounts. Evidently, the addition has been made by the Assessing Officer in search assessment under section 153A on the basis of incriminating material found during the course of the search. The assessee is claiming that till the income on the sale is accrued, both the cheque and the cash amount received should be given same treatment of advance and cash component only should not be treated as income of the assessee. In our opinion, any receipt can be treated as per the consistent mercantile method of accounting followed by the assessee, if same is entered in the books of accounts. If it is not entered in the books of accounts for the year under consideration, the receipt is beyond books of accounts and is in the nature of undisclosed income on the basis of incriminating material. Certainly, receipts recorded an incriminating material cannot be treated at par with receipt recorded in regular books of accounts for computing profit and gains of the business under the head ‘profit and gains of the business’. This cash receipt has been swallowed by the assessee without disclosing in books of accounts as ‘advance’ against the registration of the sale of the land and thus it loose the character of ‘advance’. Accordingly, we concur Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 18 with the finding of the Ld. CIT(A) of treating these cash receipts as income of the assessee in the year under consideration. 10.Before us, the Ld. counsel of the assessee relied on the decision of the Tribunal in the case ofShiv Sai developers 134 ITD 445 (Mum),which the Ld. CIT(A) has distinguished as under: “23.1 It is claimed that. in the case of Shiv Sai Developers 134 ITD 445 (Mum) 2011 the jurisdictional Mumbai tribunal held that the amount received as earnest money as advance as per seized MOU even though not recorded in books of accounts, could not be treated as income in the year where the transfer of land had not taken place. In this case there was conclusive evidence in the form of a memorandum of understanding which was found during the course of search which revealed that the assessee had received cash against the transaction of sale of land which was not recorded in the books of account. In this case the assignee of the MOU, namely M/s-Hara Shiddha Developers confirmed during survey that it had made a payment of Rs. 1.51 Crore to the assessee in cash: In the case of the appellant however, there is no ownershp from the parties of the paid cash to-the appellant. The appellant too has not provided any such confirmation. The source of such cash being undisclosed, and the same being not recorded in the books of the appellant, clearly gives it a character of income as and when received. Thus, the reliance on this decision of the Mumbai TAT is not on similar facts.” 11.In the said case, a MOU was found between the assessee and the parties who gave cash and those parties have also accepted the fact of giving cash. But in the instant case, assessee has not filed any confirmation of those parties that Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 19 they have paid cash and therefore source of the cash though recorded in the seized document against the parties from whom cheque is received, the onus is on the assessee to substantiate that cash was received from those parties. Until then source of the cash is unexplained in the hand of the assessee. In view of the distinguishing facts, the case cited by the assessee, cannot be relied upon. 11.1 Regarding the quantum of the addition of cash, the Ld. counsel of the assessee submitted that part of the cash was returned back to 2 parties. The relevant submissions of the assessee are reproduced as under: “2.2The appellant for the purpose of achieving harmonious development of the land entered) into understanding with adjoining land owners. Accordingly, land acquired by/to be acquired by Sai Rydam Realtors Pvt. Ltd. (46,820 sq. meters), Sai Ashish Developers (6,880 sq. meters) & Inus Periera (18,920 sq. meters) was amalgamated and layout of 2,66,470 sq. mtrs (nearly 66 acres) was prepared and submitted for approval. Both the relevant seized papers record the amounts received by cash and by cheque against proposed sale of FSI/development rights jointly by the appellant company and M/s Sai Rydam Realtors Pvt. Ltd. for the township to be developed at Gokhivare, Taluka Vasai. 2.3As is apparent from the seized documents, the appellant commenced the collection of funds against proposed sale of FSI with the date of Is receipt being as early as 13.03.2010 (kindly refer to entry in the name of M/s. Raj Enterprises for proposed sale of 500000 sq. ft. FSI). However, due to several reasons including delay in acquiring the entire land parcel, various reservations and restrictions imposed on development of the said land, certain parties backed out of the transaction and the appellant had to refund the entire consideration Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 20 received from these parties. During the course of asst. proceedings, the above facts with documentary evidences in respect of two parties viz. Marwadi and Sanjay Agarwal - Sai Rydam Realtors Pvt. Ltd. were explained to Id. AO. The proposed transaction for sale of FSI to Marwadi being sale of 100000 sq. feet in respect of which seized paper reflected Rs.24,50,000/- advance received through bank and Rs.3.60.00.000/- in cash was cancelled and advances refunded to the said party on 17.02.2014/18.02.2014 (before the date of search action) and the same is evident from the ledger account of the said party from the appellant's books of accounts annexed at page 156 of paper book. Similarly, transaction with Sanjay Agarwal - on A/c Sai Rydam for sale of 45,000 sq. feet of FSI in respect of which seized paper reflects Rs.2,82,00,000/- advance received through bank and Rs.3,68,00,000/- in cash was also cancelled due to considerable delay in acquisition of land and advance refunded by Sai Rydam to the said party from 02.09.2014 onwards in installments. This fact is evident from the ledger account of the said party from the books of accounts of Sai Rydam annexed at pages 157 to 159 of the paper book. Since the cheque amount has been returned, it follows as a natural corollary that the amount received in cash had also been returned.” 11.3 We find that Ld. CIT(A) has rejected this claim of the assessee observing as under: “18.A perusal of the ledger account of Pravin Jain (Marwadf in the books of the appellant company indicate receipt of total sum of ₹24,50,000/- on various dates in F.Y. 2010-11 and payments of the sum of Rs.24,50,000/- on 17/2/2014 &18/2/2014. However, only one payment of Rs.6,00,000/- on 17/2/2014 appears in the name of Pravin L. Jain whereas the other payment of Rs.10,00,000/- in the name of Shailesh Barot, other payment of Rs.2,50,000/- -in the name of Kanhailal Jan and Rs.6,00,000/- in the name of Doltaram Jain has Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 21 been mentioned and taken to square up the receipts from Pravin Jain. These facts do not confirm the claim that the entire cheque amount was returned back to 'Mawadi. Further, there is no evidence that the admitted cash receipt of .Rs.3,60,00.000/- from 'Marwadi' was returned to him Accordingly, the claim of the appellant vis-à-vis. 'Marwadi' cannot be accepted as true. Similarly, as regards the claim that the money received from Sanjay Agarwal was returned to him, it is seen that the ledger account of Sanjay Agarwal in the Docks of Sai Rydam Realtors Pvt Ltd has been produced, the receipt of Rs.2,72,00,000/- in cheque and the payments of.Rs.2,72,00,000/- on various dates, all of which are after the search on 31/7/2014, and therefore, this argument of the appellant is also a make believe argument and therefore cannot be accepted. Further, as regard to the cash receipts from. Sanjay Agarwal, as mentioned in the document to the extent of Rs.3,68,00,000/-, there is no evidence that this amount was also returned. As such the claim of the appellant in respect of the above two persons cannot be accepted.” 11.4We find that the claim of return of cash has been made after the date of the search and no such document showing return of cash has been found during the course of the search. The assessee has only filed ledger accounts but did not produce those parties before the Assessing Officer in support of his claim along with documentary evidence. In absence of any documentary evidences in the books of accounts or return of income filed by those two parties prior to search action, contention of the assessee cannot be accepted. Accordingly, we do not find any error in the order of the Ld. CIT(A) in rejecting such claim of the assessee. Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 22 11.5 Next ground, raised in the appeals is regarding not admitting additional evidence by the Ld. CIT(A). The Ld. counsel of the assessee submitted that the assessee in assessment year 2016-17 sold part of FSI to one of the purchase parties noted in the seized papers i.e. M/s Raj Enterprises and accounted for the cheque as well as cash consideration as per the seized document as per part of sales. According to him, thus the assessee has offered part of cash consideration to tax in subsequent years, which has resulted into taxing of the same income twice, once in the year of the receipt as per the Assessing Officer and again in the year of the sale as per the assessee. The Ld. counsel submitted that the assessee requested before the Ld. CIT(A) to delete the addition in view of the double taxation and in support of his claim he filed following documents: (i)Ledger extract of M/s Raj Enterprises in the books of accounts of the assessee, where part of the agreed FSI/development rights have been sold in cash consideration was offered to tax in assessment year 2016-17 (ii)Copy of audited financial statement with acknowledgement for Income Tax return for assessment year 2016-17 12.The Ld. CIT(A) forwarded said additional evidence to the Assessing Officer in terms of rule 46A(3) of Income Tax Rules, 1962 (in short ‘the Rules’) Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 23 for his objection and comments. After taking into consideration remand report of the Assessing Officer, the Ld. CIT(A) did not find the additional evidences worth admission. The relevant finding of the Ld. CIT(A) is reproduced as under: “19.The appellant has stated that the cheque as well-as cash consideration as per the seized documents has been offered as sales in AY.2016-17 and subsequent years to tax with respect to the sale transactions which have attained finality. A ledger extract and I.T.Return of M/s. Raj Enterprises has been offered as supporting evidence. As these are additional evidences which were not before the AO at the time of assessment, by this office letter dd. 11/9/2019, the AO was requested to offer comments on these additional evidences sought to be filed in appeal. In a report dtd.30/1/2020, the AO has objected to the admission of the additional evidence; stating that the case of the appellant did not fall under any of the clauses mentioned under R 46A of the I.T. Rules. The AO has also taken an exception to the fact that the appellant could not provide any justification as to why the return of income for AY. 2016-17 was not filed before due date for filing the return u/s 139(1) of the Act. In view of the claim of the appellant that the cash receipts along with the cheque receipts in the case of completed transaction of Raj Enterprises was offered to tax in the year of sale i.e. A.Y. 2016-17, the IT filed by the appellant company for A.Y. 2015-17 was examined and from the said IT it is noted that the net profit before tax as per the P & L account is a loss of Rs.53,72,240/- and the total income is again a loss and therefore there is no tax liability accruing to the appellant assessee for A. Y. 2016-17 on the above said transaction: As regard, to the request of the appellant for admitting the additional evidence of the Ledger account of M/s Raj Enterprises, evidencing sale in A.Y 2016-17, these additional evidences relate to period much after the date of search and therefore cannot be accepted. The decision on the case car only be made based on the facts and circumstances of the case till the date of Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 24 search and not on the make believe arrangements made by the appellant on the basis of books and documents prepared to justify its claim after the event. Accordingly, the additional evidence as claimed above is not admitted as it only vitiates the facts as it stood on the date of search.” 13.We have heard rival submission of the parties and perused the relevant material on record. We find that Ld. CIT(A) has duly examined the additional evidence submitted by the assessee. Since the Ld. CIT(A) has already given finding that cash receipts recorded in the seized documents are to be assessed in assessment years corresponding to the search period and therefore admitting the additional evidence supporting the claim of the assessee of taxability of cash receipt in the year of the sale on the basis of one instance of sale agreement in the case of M/s Raj Enterprises, was of no use. In our opinion, the Ld. CIT(A) is justified in his finding because, admitting the additional evidence would not serve any useful purpose as he has already sustained the taxability of cash received in the year of cash received. The grounds raised by the assessee in respective assessment years are accordingly dismissed. 14.The next ground raised in the appeals is regarding enhancement of income by the Ld. CIT(A). We find that Assessing Officer has made addition of cash received of ₹59,73,77,100/-in assessment year 2011-12 to assessment year 2015-16, treating the date of receipt of first payment as date of receipt of Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 25 cash. However, the Ld. CIT(A), treated the date of last payment as date of receipt of the cash which resulted into reduction of addition in few years and increase of addition in other years. The relevant finding of the Ld. CIT(A) is reproduced as under: “27. To conclude, the total cash receipts of ₹59,73,77,100/- assessed as undisclosed income of the appellant for AYs 2011-12 to 2015-16 is upheld. However, the AO shall assess the total cash receipts from each of the land transaction listed in the seized documents and bring it to tax in the year of the last date of cash receipt in the seized documents and where no dates are mentioned, on the date of search. The appeals of the appellant for AYs 2011-12, 2012-13, 2013-14, 2014-15 and 2015-16 are dismissed.” 15.After giving effect to the order of the Ld. CIT(A), the Ld. Assessing Officer computed the assessed income. A table of comparison of income assessed by the Assessing Officer and change in assessed income due to finding of the Ld. CIT(A) is reproduced as under: Asst. YearAddition as per Id AOAddition after the order of the Hon. CIT(A) 2011-1238,30,00,000/-5,50,00,000/- 2012-137,93,77,100/-2,65,00,000/- 2013-1410,00,000/-18,13,77,100/- 2014-156,20,00,000/-20,05,00,000/- 2015-167,20,00,000/-13,40,00,000/- Total₹ 59,73,77,100/-59,73,77,100/- 16.Before us the Ld. counsel of the assessee has submitted that due to the direction of the Ld. CIT(A), the assessed income in assessment year 2013-14, 2014-15 and 2015-16 has been enhanced as under: Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 26 4.1As is clear from the chart appearing at sr. no. 1 above and the separate working statement submitted, the Hon’ble CIT(A) due to his direction to hold the income on account of cash receipts to be brought to tax in the asst. year as per the last payment date of cash receipt as per the seized paper (para 22/pg No. 15 & 16 of Hon. CIT(A)) has enhanced the income of the appellant for AY 2013-14, AY 2014-15 and AY 2015-16 as under : Asst. YearEnhancement of income by Hon’ble CIT(A) 2013-14 ₹18,03,77,100/- 2014-15 ₹13,85,00,000/- 2015-16 ₹6,20,00,000/- 17.The Ld. counsel submitted that above enhancement has been done by the Ld. CIT(A) without granting any opportunity to the assessee against such enhancement. He submitted that section 251(2) of the Act mandates that Ld. CIT(A) shall not enhance an assessment, unless the assessee had been any reasonable opportunity of showing causing against such enhancement and in view of the breach by the Ld. CIT(A), the said enhancement should be deleted. In support of his contention, the Ld. counsel relied on following decisions: i.Naresh Sunderlal Chug-vs-ITO, 93 taxmann.com 485 (Pune-Trib.) [2018]/171 ITD 116 (Pune-Trib.) [2018] ii.Gadore Tools (P.) Ltd.-vs.-CIT, 105 Taxman 3 (Delhi) [1999]/238 ITR 268 (Delhi)/[2000]. 18.The Ld. DR on the other hand submitted that Ld. CIT(A) has given his verdict on the issue of assessment of cash received whether it should be Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 27 assessed on the first date of payment received by the assessee as mentioned in the seized document or it should be assessed on the last day of payment received by the assessee. Ld. DR submitted that Ld. CIT(A) has adjudicated one of the ground raised by the assessee and he has not enhanced income in respect of any independent source of income. Therefore, according to him, finding of the Ld. CIT(A) is not in the nature of enhancement and therefore no separate notice was required on the part of the Ld. CIT(A). 19.We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that Ld. CIT(A) has decided the issue raised by the assessee that assessment of cash received on the basis of date of first payment by the Assessing Officer was not justified. The Ld. CIT(A) after perusing the seized document and considering objection of the assessee, held that addition for cash received in particular year should be according to the last date of payment recorded in the seized document. We agree with the Ld. DR that Ld. CIT(A) has only adjudicated the issue in dispute raised by the assessee in its appeal and no enhancement has been made by the him in respect of a new source of income. As far as ratio in the decisions relied upon by the Ld. counsel of the assessee in the case of Naresh Sunddrlal Chug (supra) and Gadore Tools (P) Ltd (supra) is concerned, there is no dispute that Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 28 no enhancement can be made by the Ld. CIT(A) unless assessee had been provided a reasonable opportunity of show causing again said enhancement. In the case of Naresh Sunderlal Chug (supra), the Ld. CIT(A) treated the sale of development rights as adventure in the nature of trade/business instead of long-term capital gain as assessed by the Assessing Officer, which resulted in enhancement of assessment. The facts of the instant case before us are distinguishable from the case relied upon by the assessee. In view of the aforesaid discussion, we reject the contention of the assessee and accordingly ground raised in respect of the enhancement in respective appeals for assessment year 2013-14 to 2015-16 are dismissed. 20.In the result, all the five appeals of the assessee are dismissed. Order pronounced in the open Court on 30/03/2022. Sd/-Sd/- (KAVITHA RAJAGOPAL)(OM PRAKASH KANT) JUDICIAL MEMBERACCOUNTANT MEMBER Mumbai; Dated:30/03/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to : 1.The Appellant 2.The Respondent. 3.The CIT(A)- 4.CIT Rashmi Ameya Developers ITA Nos. 1990/M/2020 & Ors. 29 5.DR, ITAT, Mumbai 6.Guard file. BY ORDER, //True Copy// (Sr. Private Secretary) ITAT, Mumbai