DCIT CEN CIR 1, THANE V. RAJ HOMES S.V. GROUP, THANE

ITA 2408/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2578 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 05-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Assessee Lawyers: B V JHAVERI; MAYANK V THOSAR
• Keywords: Unexplained investment; Business income; Depreciation; Loose papers; Principle of natural justice; Corroborative evidences; Documents seized
• Section: 132; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH , JM ITA NO. 2707/MUM/2017 (ASSESSMENT YEAR: 2012-13) RAJ HOMES S. V. GROUP PRIME MALL, PLOT NO. D-66, SECTOR 12, KHARGHAR, NAVI MUMBAI-410 210 VS. DCIT, CENTRAL CIRCLE-1, ASHAR I.T. PARK, ROAD NO. 16Z, WAGALE IND. ESTATE, THANE (W)-400 604 PAN/GIR NO. AAJFR 0018 E ( ASSESSEE ) : ( RE VENUE ) ITA NO. 2408/MUM/2017 (ASSESSMENT YEAR: 2012-13) DCIT, CENTRAL CIRCLE-1, ASHAR I.T. PARK, ROAD NO. 16Z, WAGALE IND. ESTATE, THANE (W) - 400 604 VS. RAJ HOMES S. V. GROUP PRIME MALL, PLOT NO. D-66, SECTOR 12, KHARGHAR, NAVI MUMBAI - 410 210 PAN/GIR NO. AAJFR 0018 E ( RE VENUE ) : ( ASSESSEE ) ASSESSEE BY : SHRI B. V. JHAVERI & SHRI MAYANK V. THOSAR REVENUE BY : SHRI D. G. PANSARI DATE OF HEARING : 06.02.2019 DATE OF PRONOUNCEMENT : 07.03 .2019 O R D E R PER SHAMIM YAHYA, A. M.: THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE REV ENUE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-11, PUNE (LD.CIT(A) FOR SHORT) DATED 25.01.2017 AND PERTAINS TO THE ASSESSM ENT YEAR (A.Y.) 2012-13. 2. THE GROUNDS OF APPEAL RAISED IN THE ASSESSEES A PPEAL READ AS UNDER: ON THE FACTS AND IN LAW, 1. THE HON. CIT (A) ERRED IN CONFIRMING ADDITION OF RS. 4,26,00,000/-, AS UNDISCLOSED PROFIT FROM THE REAL ESTATE PROJECT, PR IME MALL AT KHARGHAR, NOT APPRECIATING THAT THE TRANSACTIONS RECORDED ON THE LOOSE PAPERS FOUND AND SEIZED IN THE COURSE OF SEARCH ACTION ON THAKKAR GROUP OF THANE, DID NOT PERTAIN T O THE AFFAIRS OF THE APPELLANT FIRM. 2. WITHOUT PREJUDICE, THE HON. CIT (A) ERRED IN CON FIRMING ADDITION OF RS.4,26,00,000/-, AS UNDISCLOSED PROFIT FROM THE RE AL ESTATE PROJECT, PRIME MALL AT KHARGHAR, NOT APPRECIATING THAT THE APPELLANT FOLLO WED PROJECT COMPLETION METHOD OF ACCOUNTING AND THE REVENUE FROM THE PROJECT WAS NOT REQUIRED TO BE RECOGNISED IN THE YEAR 2 ITA NOS. 2707& 2408/MUM/2017 UNDER APPEAL AS THE PROJECT WAS NOT COMPLETED TILL 31 ST MARCH 2012 AND THEREFORE THE ADDITION IN THE YEAR UNDER APPEAL WAS NOT JUSTIFIED . 3. WITHOUT PREJUDICE, THE HON. CIT (A) ERRED IN CON FIRMING ADDITION OF RS.4,26,00,000/-, AS UNDISCLOSED PROFIT FROM THE RE AL ESTATE PROJECT, PRIME MALL AT KHARGHAR, IGNORING THAT THE ESTIMATED PROFIT OF RS. 4,26,00,000/- WORKED OUT ON THE SEIZED PAPERS, INCLUDED PROFIT ON CLOSING STOCK ALSO, WHIC H WAS RECORDED AT MARKET VALUE AND THAT SEVERAL EXPENDITURES WERE NOT CONSIDERED AND SALES FIGURE WAS ALSO ESTIMATED AND THEREFORE THE ADDITION OF RS. 4,26,00,000/- WAS NOT APPROPRIATE. 3. THE GROUNDS OF APPEAL RAISED IN THE REVENUES AP PEAL READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A)-11, PUNE ERRED IN REDUCING THE ADDITION FROM RS. 9,54,00,000 /- TO RS. 4,26,00,000/- ON ACCOUNT OF UNEXPLAINED AND UNACCOUNTED RECEIPTS AS REFLECTED I N SEIZED PAPERS BY NOT APPRECIATING THE FACTS THAT IF THERE IS ANY TRANSACTION ON THE S EIZED PAPERS IT IS THE DUTY OF THE ASSESSEE TO EXPLAIN THE SAME ALONG WITH SUPPORTING DOCUMENTS . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)-11, PUNE ERRED IN DELETING THE ADDITION TO THE EXTENT OF RS. 5,28,00,000/- ON THE BASIS OF PROFIT BEING REFLECTED IN THE SEIZED PAPERS WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HAS NOT SUBMITTED ANY SUPPORTING EVIDENCE OF EXPENSES AND W ITHOUT THE SAME SET-OFF FOR EXPENSES COULD NOT BE GIVEN. 3. THE APPELLANT PRAYS THE ORDER OF THE LD. CIT(A) -11, PUNE, MAY BE VACATED ON THE ABOVE MENTIONED ISSUES AND THAT OF THE ASSESSING OF FICER BE RESTORED. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF REAL ESTATE. THE AS SESSEE FIRM IS PART OF THAKKAR GROUP ON WHICH SEARCH ACTION U/S. 132 WAS CONDUCTE D ON 22.2.2012. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDER , DEVELOPER & CONTRACTOR. THE ASSESSEE FIRM HAD CONSTRUCTED/DEVELOPED A PROJECT PRIME MAL L AT PLOT NO.D-66, SECTOR 12, KHARGHAR, NAVI MUMBAI. PRIME MALL HAS FIVE FLOORS A ND HAS A CINEMA HALL. 5. THE ASSESSING OFFICER HAS NOTED IN THE ASSESSMEN T ORDER THAT DURING THE COURSE OF SEARCH PROCEEDINGS AT THE RESIDENTIAL PREMISES OF S HRI SHANKARLAL VIRJI THAKKAR, IT WAS SEEN FROM DOCUMENTS SEIZED BUNDLE NO.2, PAGE NO. 2 & 9 OF PARTY NO.TR-2, THAT ON PAGE NO.2 & PAGE NO.9 DETAILS OF VARIOUS ITEMS OF COST A ND TOTAL EXPENSES ON THE PROJECT HAVE BEEN WORKED OUT. THE TOTAL COST SHOWN ON THE PAGE I S RS. 16.96 CRORES AND FURTHER SALES WERE SHOWN AS FOLLOWS- 3 ITA NOS. 2707& 2408/MUM/2017 '(1) 5.22 CRORES & (2) 4.32 CRORES, TOTAL 9.54 CRORES,' THE FURTHER DETAILS GIVEN/WRITTEN ON THE SEIZED DOC UMENT WERE AS FOLLOWS - UNSOLD STOCK - 10.07 CRORES, BAKI PAYMENT 1 CRORES AND DEVELOPMENT CHARGES .61 CRORES TOTALING TO RS.21.22 CRORES AGAINST THE ABOVE EXPENSES OF RS.16.96 CRORES WERE SHOWN WHICH RESULTED IN PROFIT OF RS.4.26 CRORES. 6. THE A.O. FURTHER NOTED THAT ON THE REVERSE SIDE OF PAGE NO.9 THE ASSESSEE HAS NOTED SALES OF RS.5.22 CRORES. THE ASSESSEE HAS RECORDED A LOSS OF RS. 4 CRORES BASED ON THE TOTAL EXPENSES OF RS. 17 CRORES. HOWEVER, THE LOSS OF RS. 4 CRORES IS NOT ACTUALLY A LOSS SINCE UNSOLD STOCK HAS NOT BEEN INCLUDED IN THIS CALCULAT ION WHICH HAS BEEN DONE ON THE FRONT OF THE PAGE WHERE THE FIGURE ARRIVED AT IS RS.4.26 CRO RES PROFIT. 7. THEREAFTER, THE A.O. ANALYZED THE FRONT SIDE OF PAGE NINE AS UNDER: FROM FURTHER ANALYSIS OF THE ABOVE NOTINGS IT IS SE EN THAT THE NOTING '(1) 5.22 CRORES' MEANS SALES OF 5.22 CRORES AS THE WORD 'VECHAN' IS WRITTEN ON TOP OF THE NOTINGS, WHICH MEANS 'SALES' IN GUJARATI LANGUAGE. SIMILARLY, THE NOTING '(2) 4.32 CRORES' MEANS CASH COMPONENT OF SALES AS IN NORMAL PARLANCE THE WORD ' NO. 2 MONEY' DENOTES BLACK MONEY OR MONEY WHICH IS NOT OFFERED FOR TAX. ON FURTHER P ERUSAL OF THE ACCOUNTS OF THE ASSESSEE, IT IS SEEN THAT THE ASSESSEE HAS NOT SHOWN ANY SALE S BUT THE ENTIRE AMOUNT RECEIVED FROM THE CUSTOMERS IS REFLECTED IN BALANCE SHEET AS 'ADV ANCES FROM CUSTOMERS'. THUS, IT IS SEEN THAT THE NO. 1SALES OF RS.5.22 CRORES REFLECTED I N THE SEIZED NOTINGS ARE NOT OFFERED FOR TAX BY THE ASSESSEE. NO FURTHER SUBMISSION HAS BEEN MADE BY THE ASSESSEE IN RESPECT OF THE ABOVE NOTINGS. VIDE ORDERSHEET DATED 18.3.2015, IT WAS SPECIFICALLY PROPOSED TO ADD UNDISCLOSED SALES OF RS.5.22 CRORES 85 CASH COMPONE NT OF RS.4.32 CRORES BEING UNDISCLOSED SALES 85 UNDISCLOSED CASH COMPONENT REC EIVED BY THE ASSESSEE. IN RESPONSE THE ASSESSEE ATTENDED ON 20.3.2015 AND REQUESTED FO R ADJOURNMENT TO SUBMIT HIS REPLY AS HIS CLOSE RELATIVE WAS SUFFERING FROM BLOOD CANCER. FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE, THE HEARING WAS ADJOURNED TO 24.3.2015. DU RING THE COURSE OF HEARING ON 24.3.2015, THE ASSESSEE WAS ALSO ASKED TO SUBMIT TH E FOLLOWING DETAILS IN RESPECT OF PROJECT 'PRIME MALL' - A) COPY OF ALL SALE AGREEMENTS ENTERED TILL DATE B) COMMENCEMENT & OCCUPATION CERTIFICATE C) DETAILS OF SOLD & UNSOLD UNITS D) DETAILS OF PARKING ALLOTTED & SOLD 4 ITA NOS. 2707& 2408/MUM/2017 HOWEVER, ON THE DATE OF HEARING, I.E. ON 24.3.2015 , NONE ATTENDED NOR ANY DETAILS WERE RECEIVED FROM THE ASSESSEE. THE ASSESSEE HAS A LSO NOT SUBMITTED ANY REASONS FOR NON-ATTENDANCE & NON-SUBMISSION OF REQUIRED DETAILS . IN VIEW OF THE ABOVE CIRCUMSTANCES, THE ASSESSMENT IS COMPLETED ON THE B ASIS OF THE ABOVE DISCUSSION & OBSERVATIONS MADE IN THE PRECEDING PARAS. THUS, IT IS OBSERVED THAT THE ASSESSEE HAS NOT GIV EN ANY SATISFACTORY REPLY DURING THE COURSE OF SEARCH PROCEEDINGS AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION, UNDISCL OSED SALES OF RS. 5.22 CRORES & CASH COMPONENT OF RS. 4.32 CRORES ARE ADDED TO THE TOTAL INCOME OF THE ASSESSEE BEING UNDISCLOSED SALES & UNDISCLOSED CASH COMPONENT RECE IVED BY THE ASSESSEE. AS THE ASSESSEE HAS CONCEALED HIS INCOME BY GIVING INACCUR ATE PARTICULARS OF INCOME, PENALTY PROCEEDINGS U/S.271(L)(C) ARE INITIATED SEPARATELY. AFTER VERIFICATION, THE TOTAL INCOME IS COMPUTED A S UNDER : (FIGURES IN RUPEES) RETURNED INCOME NIL ADD : 1. ON A/C OF UNDISCLOSED SALES AS PER PARA 4 5,22,00,000/ - 2. ON A/C OF ON MONEY AS PER PARA 4 4,32,00,000/- 9,54,00,000/- ASSESSED INCOME 9,54,00,000/- 8. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) GRANT ED PART RELIEF TO THE ASSESSEE. HE RESTRICTED THE ADDITION TO 4.32 CRORES. THE LD. CIT (A) HELD AS UNDER: 7. THE APPELLANT'S OBJECTIONS ARE TAKEN UP ONE BY ONE. THE APPELLANT'S FIRST OBJECTION IS THAT THE SAID SEIZED PAPERS CAN NOT BE PRESUMED TO BE BELONGING TO SHRI SHANKARJI V. THAKKAR OR THE APPELLANT FIRM. THE APP ELLANT'S OBJECTION IS THAT AS THE SAID PAPERS WERE SEIZED FROM THE RESIDENCE OF SHRI THAKK AR, THE PRESUMPTION U/S 132(4A) CAN NOT BE APPLIED AGAINST THE APPELLANT. THE .ARGUMENT IS WITHOUT ANY MERIT, IT \S ADMITTED THAT SHRI THAKKAR IS A PARTNER IN THE APPELLANT FIR M. A PARTNERSHIP FIRM THOUGH ACCEPTED AS A SEPARATE CLASS OF PERSON UNDER THE I T ACT, DOES NOT HAVE A CORPORAL EXISTENCE, IT HAS TO BE REPRESENTED THROUGH ITS PARTNERS, THEREFO RE IN REAL LIFE THE FIRM AND THE PARTNERS ARE THE SAME AND ONE. UNDER THE PARTNERSHIP ACT EAC H PARTNER REPRESENTS THE FIRM AND ALL THE PARTNERS ARE JOINTLY AND SEVERALLY RESPONSIBLE FOR THEIR ACTS AS PARTNER OF THE FIRM. THUS ANY MATERIAL, DOCUMENTS ETC FOUND IN THE POSSESSION OR CONTROL OF ANY OF THE PARTNERS CAN BE TREATED AS FOUND IN THE POSSESSION OR CONTROL OF THE FIRM. THE FIRM HAS NO OTHER PHYSICAL EXISTENCE EXCEPT FOR ITS PARTNERS TO POSSE SS OR OWN PROPERTY. THIS IS THE ONLY WAY PRESUMPTION PROVIDED U/S 132(4A) CAN BE UNDERST OOD IN THE CONTEXT OF A PARTNERSHIP FIRM, THE APPELLANT'S OBJECTION IS THEREFORE REJECT ED AND IT IS HELD THAT THE AO WAS RIGHT IN LAW IN HOLDING THAT IN THE ABSENCE OF ANY SATISFACT ORY EXPLANATION BY THE APPELLANT OR SHRI THAKKAR TO THE CONTRARY, THE SAID SEIZED PAPERS CAN BE PRESUMED TO BE BELONGING TO THE APPELLANT AND THEIR CONTENTS MAY BE ACCEPTED AS GEN UINE AND TRUE. 8. THE PRESUMPTION U/S 132(4A) IS REBUTTABLE ONE. IT CAN BE EXAMINED WHETHER THE APPELLANT HAS -SATISFACTORILY EXPLAINED AWAY TH E CONTENTS OF THE SEIZED PAPERS TO REBUT THE PRESUMPTION. THE RECORDS SHOW THAT IN HIS FIRST STATEMENT RECORDED DURING THE 5 ITA NOS. 2707& 2408/MUM/2017 SEARCH SHRI THAKKAR PRACTICALLY REFUSED TO GIVE ANY COGENT EXPLANATION REGARDING THE CONTENTS OF THE SEIZED PAPERS AS CAN BE SEEN FROM A NSWER NO 15 AND 16 OF HIS STATEMENT U/S 132(4) DATED 22/2/2012. SHRI THAKKAR DISOWNED T HE PAPERS BY STATING THAT AS HE IS A SOCIAL WORKER MANY PERSONS VISIT HIM AND HE CAN NOT SAY WHAT THE SEIZED PAPERS ARE ABOUT. IT IS EXACTLY TO DEAL WITH THIS TYPE OF ST ONEWALLING BY THE PERSONS SEARCHED THAT THE PRESUMPTION U/S 132(4A) HAS BEEN INSERTED IN THE ST ATUTE. 9. DURING THE COURSE OF THE ASST PROCEEDINGS, SHRI THAKKAR'S A R FILED A DETAILED LETTER EXPLAINING THE CONTENTS OF THE SEIZED PAPERS VIDE A ETTER FI ED BEFORE THE AO ON 5/03/2014. THE LETTER MAKES IT VERY CLEAR THAT ALMO ST ALL THE SEIZED PAPERS WERE RELATED TO SHRI THAKKAR AND HIS GROUP CONCERNS. THERE IS NO SO LID EVIDENCE OF SHRI THAKKAR'S SOCIAL CHARITABLE ACTIVITIES IN THIS LETTER EXCEPT THAT HE REFUSED TO GIVE FULL DETAILS OF CERTAIN UNCOMFORTABLE ENTRIES IN THE SEIZED PAPERS. AS REGA RDS THE PAPERS RELIED ON BY THE AO FOR MAKING THE ADDITION, FOLLOWING EXPLANATION WAS FURN ISHED BY THE APPELLANT'S AR IN THIS LETTER: 'SIR PAGE NO 2 (OF BUNDLE NO 2} CONTAINS CERTAIN PR OJECT HAVING GROUND PLUS FOUR FLOORS WITH AN AREA OF 14026 SQ FT, IT ALSO CONTAIN S THE ESTIMATED COST OF THE PROJECT, LOANS TO BE TAKEN. FURTHER, IT SHOWS THE E STIMATED RATES AT WHICH THE UNITS ON EACH OF GROUND TO FOURTH FLOOR WILL BE SOLD OUT. SIR, EVEN PAGE NO. 9 SHOWS THE COST AND OTHER EXPENSES ON A PARTICULAR PROJECT. IT ALSO SHOWS THE EXPECTED SALES PRICE FROM A PARTICULAR PROJECT. SIR, AS ALREADY B EEN EXPLAINED EARLIER AS MY AFORESAID CLIENT IS IN THE BUSINESS OF BUILDERS AND DEVELOPERS, THE SAID TWO DOCUMENTS CAN BE RELATED TO ANY OF THE PROPOSALS FO R THE CONSTRUCTION RECEIVED BY MY AFORESAID CLIENT, THE COST ON THE SAID PROJECT, THE SALE PRICE RECEIVABLE AND THE ESTIMATED PROFIT ON THE SAID PROJECT:. SIR, IT DO ES NOT MEAN THAT MY AFORESAID CLIENT HAD RECEIVED ANY PROFIT AMOUNTING TO RS. 4.2 6 CRORES AS MENTIONED BY YOUR GOODSEIF. SIR, EVEN PROJECT PRIME MALL DEVELOPED BY M/S. RAJ HOMES 5 V GROUP IS NOT YET COMPLETED AND AS WE FOLLOW PERCENTAGE CO MPLETION METHOD OF ACCOUNTING, THE SALES IS NOT YET ACCOUNTED FOR IN THE BOOKS. THEREFORE, YOUR SAYING ON THE BASIS OF SAID DOCUMENT THAT 5.22 CROR E IS SALES OF RAJ HOME 5 V GROUP IS NET ACCEPTABLE AS THE SAME IS NOT AT ALL A CCOUNTED FOR IN THE BOOKS. SIR, IN M/S. RAJ HOME S V GROUP, THERE IS CLOSING WIP OF RS. 12.47 CRORES. EVEN THE PLOT COST OF RS. 7.27 CRORES DOES NOT TALLY WITH TH E BOOKS. HENCE, NONE OF THE FIGURES TALLY WITH THE FIGURES SHOWN IN THE SEIZE D DOCUMENT. HENCE, IT CANNOT BE PRESUMED THAT THESE TWO DOCUMENTS PERTAINS TO M/ S. RAJ HOME S V GROUP FOR THE PROJECT PRIME MALL. SIR, EVEN THE FIGURES OF PLOT OF LAND, STAMP DUTY, EXPENSES SHOWN IN THE SAID DOCUMENTS ARE AN ESTIMATED FIGURE S. HENCE, IT CAN BE PRESUMED THAT THIS DOCUMENTS MAY PERTAIN TO SOME OF THE PROJ ECT PROPOSAL RECEIVED BY MY AFORESAID CLIENT WHEREIN THE SALES HAVE OCCURRED IN TWO STAGES 1 & 2, THE UNSOLD STOCK OF THE SAID PROJECT AND THE COST INCURRED ON THE SAID PROJECT ALONG WITH THE EXPECTED PROFIT. 10. IT IS NOT SURPRISING THAT THE AO WAS NOT SATISF IED WITH THIS EXPLANATION. INSTEAD OF TELLING THE AO WHAT THE PAPER WAS ABOUT, THE APPELL ANT TRIED TO EXPLAIN WHAT IT WAS NOT. THIS IS NOT A WAY TO REBUT THE PRESUMPTION CAST U/S 132(4A). 11. IN THE COURSE OF APPEAL PROCEEDINGS THE APPELL ANT HAS FILED AN AFFIDAVIT FROM SHRI THAKKAR IN WHICH HE HAS DENIED ANY CONNECTION WITH THE SEIZED PAPERS. THE AFFIDAVIT IS MERELY A SELF SERVING DOCUMENT CANNOT BE RELIED UPO N.HIS AGAIN IS NOT A WAY TO REBUT THE PRESUMPTION U/S 132(4 A). 12. CONTRARY TO WHAT THE APPELLANT HAS STATED IN T HE ABOVE LETTER, :~E SEIZED PAPER DOES CONTAIN DETAILS OF THE PRIME MAIL PROJECT. THE AREA 6 ITA NOS. 2707& 2408/MUM/2017 MENTIONED IN THE SEIZED PAPERS IE 14026 SQ FT ROUG HLY CORRESPONDS TO THE SALEABLE AREA OF THE PRIME MAIL. THE MALL IS INDEED A STRUCTURE HAVI NG GROUND PLUS FOUR FLOORS. AS REGARDS THE EXPENDITURE AND INCOME RECORDED ON THE SEIZED PAPERS, IT IS APPARENT THAT THE FIGURES WOULD NOT MATCH WITH THE BOOKS BECAUSE THE BOOKS DO NOT ACCOUNT FOR CASH INCOME AND CASH EXPENDITURE. FURTHER THE PAPER IS NOT WRITTEN ON THE LAST DAY OF THE FINANCIAL YEAR HENCE THE FIGURES OF COLLECTION AND EXPENDITURE MAY THE DIFFERENT. IN VIEW OF THE PRESUMPTION AVAILABLE U/S 132(4A) OF THE ACT , THE FIGURES OF INCOME AND EXPENDITURE AS RECORDED IN THE SEIZED PAPERS WOULD HAVE TO BE TAKEN AS GENUINE. 9. IN THIS REGARD, THE LD. CIT(A) REFERRED TO EARLI ER CASE LAWS AND OBSERVED AS UNDER: 16. THUS VARIOUS HIGH COURTS INCLUDING THE JURISDIC TIONAL ONE HAVE REPEATEDLY HELD THAT THE A.O. IS WELL WITHIN THE FOUR CORNERS OF TH E LAW IN MAKING ADDITIONS ON THE BASIS OF ENTRIES IN THE SEIZED PAPERS. THE APPELLANTS FIRST OBJECTION IS THEREFORE REJECTED. 10. THE LD. CIT(A) FURTHER HELD AS UNDER: 17. THE APPELLANTS NEXT OBJECTION IS THAT THE A.O. SHOULD HAVE ACCEPTED THE WRITINGS ON THE IMPUGNED SEIZED PAPERS IN TOTALITY. THE A.O. HAS MADE ADDITION FOR THE RECEIPTS MENTIONED IN THE LOSE PAPERS BUT HAS , NOT ALLOWED THE EXPENDITURE WRITTEN ON THE SAME PAPER AND INCLUDED' IN THE PROFIT CALCULATIONS. AS IS MENTIONED ABOVE, THE IMPUGNED LOSE PAPERS SHOW TOTAL PROFIT OF 4.26 CR AFTER TAKING INTO ACCOUNT THE EXPENDITURE AND CLOSING STOCK. HERE I AGREE WITH THE APPELLANT THAT THE AO CAN NOT PICK AND CHOSE BETWEEN THE ENTRIES ON THE SEIZED PAPERS. IF THE ENTRIES ARE TR UE, IT HAS TO BE TRUE IN ENTIRETY. THE AO CAN NOT SAY THAT THE ENTRIES ARE ONLY PARTIALLY PRE SUMED TO BE TRUE, THE CALCULATIONS ON THE IMPUGNED PAPERS SHOW TOTAL INCOME INCLUDING SAL ES BY CHEQUE AND CASH, RECEIVABLES, DEVELOPMENT CHARGES ETC TO BE RS.11.15 CR. THE VALUE OF THE CLOSING STOCK IS TAKEN AT RS.10.07 CR. THUS TOTAL INCOME IS WORKED O UT AT RS.21.22 CR. FROM THIS IS REDUCED 'COST' OF RS.16.96 CR. THUS THE PROFIT FROM THE PRO JECT HAS BEEN WORKED OUT AT RS.4.26 CR. I AGREE WITH THE APPELLANT'S CONTENTIONS THAT IF THE CONTENTS OF THE IMPUGNED LOSE PAPERS ARE PRESUMED TO BE TRUE U/S 132(4A), THEN THE ADDITION SHOULD NOT BE MORE THAN THE PROFIT WORKED OUT OF RS.4.26 CR. THE AO CAN NOT MAKE DISAL LOWANCE OF THE 'COST' RECORDED ON THE SAME PAPER. THE AO IS THEREFORE DIRECTED TO RESTRIC T THE ADDITION TO RS.4,26 CR AS AGAINST RS.9,54 CR ADDED BY THE AO. 18 YET ANOTHER OBJECTION OF THE APPELLANT IS THAT T HE PROFIT IF ANY ARISING FROM THE PROJECT CANNOT BE TAXED IN THE YEAR UNDER APPEAL AS THE PROJECT WAS COMPLETED IN THE FOLLOWING ASST YEAR. THE APPELLANT CLAIMS TO BE FOL LOWING PROJECT COMPLETION METHOD AND AS THERE WERE NO SALES DURING THE YEAR, NO PROFIT C AN BE TAXED. I CANNOT AGREE WITH THIS CONTENTION OF THE APPELLANT. IT IS SEEN THAT THOUGH THE APPELLANT HAD FILED NIL RETURN FOR THE ASST YEAR UNDER APPEAL, IT HAD WORKED OUT PROFIT FR OM THE PROJECT IN ITS BOOKS OF ACCOUNTS. AS PER THE PROFIT AND LOSS ACCOUNT SUBMITTED WITH T HE RETURN, THE APPELLANT HAD SHOWN PROFIT OF RS.11,06,066/- BEFORE DEPRECIATION AND INTEREST. THE NET PROFIT AFTER DEPRECIATION AND INTEREST WAS NIL AND HENCE THE RET URN WAS FILED AT NIL. IF WE SUBSTITUTE THE FIGURES OF INCOME AS SHOWN IN THE AUDITED ACCOUNTS WITH THE ACTUA FIGURES AS RECORDED IN THE SEIZED PAPERS, THE DISCLOSED PROFIT WOULD BE RS .4.26 CR AS PER THE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT. THUS THE PROF IT FROM THE PROJECT COULD BE WORKED OUT IN THE ASST YEAR UNDER APPEAL EVEN AS PER THE A PPELLANT'S AUDITED ACCOUNTS. 7 ITA NOS. 2707& 2408/MUM/2017 19. EVEN IF WE ACCEPT THAT THE APPELLANT WAS FOLLO WING PROJECT COMPLETION METHOD, THE FACT IS THAT THE PROJECT WAS VERY MUCH COMPLETED DU RING THIS YEAR ITSELF. IN THE SUBSEQUENT YEARS THERE IS NO EXPENDITURE INCURRED ON THE PROJE CTS AS PER THE DETAILS FURNISHED BY THE APPELLANT; ONLY CLOSING WIP HAS BEEN CARRIED FORWAR D. FURTHER THOUGH NO SALES ARE SHOWN IN THIS YEAR, A MAJOR PART OF THE SALES CONSIDERATI ON HAD ALREADY BEEN RECEIVED AS BOOKING ADVANCE BY THE END OF THE PREVIOUS YEAR. THUS TAXAT ION OF THE PROFIT FROM THE PROJECT IS FULLY JUSTIFIED IN THIS YEAR. 20. TO CONCLUDE, THE AO IS DIRECTED TO REDUCE THE ADDITION OF RS.9.54 CRS. TO RS.4.26 CRS. AS DISCUSSED ABOVE. THE APPEAL IS PARTLY ALLOW ED. 11. AGAINST THE ABOVE ORDER, THE ASSESSEE AND THE R EVENUE ARE IS CROSS APPEAL BEFORE US. 12. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SCRIBBLING IN THE LOOSE SHEET IS ONLY A ROUGH NOTING OF THE ESTIMATES. HE SUBMITTED THAT THERE IS NO OTHER EVID ENCE SUPPORTING THE SAID SCRIBBLING. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT DE HORS ANY CORROBORATIVE EVIDENCE, THESE SCRIBBLING ON ROUGH NOTES CANNOT BE THE SOLE BASIS FOR ADDITION FOR UNDISCLOSED INCOME. HE FURTHER SUBMITTED THAT NO DEFECT WHATSOEVER HAS BEEN FOUND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE PRECEDING AND THE SUCCEEDIN G YEAR, THE PROFIT OFFERED HAS BEEN ACCEPTED. HENCE, HE CLAIMED THAT THE ENTIRE ADDITIO N ON THE BASIS OF THE SAID LOOSE SHEET SCRIBBLING IS UNJUSTIFIED. THE ELABORATE SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE IN THIS REGARD READS AS UNDER: THE ASSESSEE FIRM FURTHER SUBMITTED THAT THE CURSOR Y LOOK AND COMPARISON OF THE PAGE NOS.2 AND 9 REVEALED THAT NOTINGS IN THE SAID SEIZE D PAPERS ARE ESTIMATED WORKING OF SOME PROJECT AND THE SAID NOTINGS ARE MADE AT DIFFERENT POINTS OF TIME RECORDING DIFFERENT SALE RATE FOR THE SAME PREMISES. EVEN THE AREA OF SOME O F THE PREMISES IN BOTH THE PROJECTS ARE DIFFERENT. EVEN THE NOTINGS ON PAGE 9 AT FRONT AND REVERSE SIDE DO NOT MATCH. IT WAS SUBMITTED THAT THESE DIFFERENCES IN THE NOTINGS CLE ARLY SHOWS THAT THE SEIZED PAPERS ARE NOTHING BUT ROUGH NOTING PERTAINING TO CERTAIN PROJ ECT. IT WAS ALSO SUBMITTED THAT THE SAID SEIZED PAPERS WERE FOUND FROM THE RESIDENCE OF ONE OF THE PARTNERS BUT IT DOES NOT MENTION THE NAME OF THE ASSESSEE FIRM DIRECTLY OR I NDIRECTLY AND THEREFORE, THE AO IS REQUIRED TO INDEPENDENTLY ESTABLISH THAT THE SEIZED PAPERS RECORD UNDISCLOSED INCOME OF THE ASSESSEE FIRM MORE SO WHEN THE SAID NOTINGS ARE NOT RECORDED IN THE HANDWRITINGS OF MR. SHANKARLAL THAKKAR OR ANY OTHER PARTNERS OF THE ASSESSEE FIRM. IT WAS FURTHER STATED 8 ITA NOS. 2707& 2408/MUM/2017 THAT THE AO HAD COPIES OF ALL FINANCIAL STATEMENTS FOR THE EARLIER ASSESSMENT YEARS AND HE COULD NOT IDENTIFY EVEN ONE TRANSACTION RECORDED IN THE SEIZED PAPERS TO MATCH WITH THE ENTRIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FIRM. 4. WITHOUT PREJUDICE TO THE AFORESAID AND WITHOUT ADMITTING, IT WAS FURTHER SUBMITTED THAT THE ADDITION OF UNDISCLOSED INCOME COULD NOT B E MADE IN THE A.Y. 2012-13 AS THE PROJECT OF CONSTRUCTING COMMERCIAL BUILDINGS CALLED 'PRIME MALL' AT KHARGHAR, NAVI MUMBAI, WAS COMPLETED ON 25 TH MARCH, 2013 WHEN THE FIRM HAD RECEIVED THE OCCUPAT ION CERTIFICATION FROM CIDCO. THEREFORE, THE PROJECT IN COME WOULD BE LIABLE TO TAX ONLY IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2013-14 AS THE A SSESSEE FIRM IS FOLLOWING THE 'COMPLETED CONTRACT METHOD'. IN THE ASSESSMENT ORDE R U/S. 143(3) OF THE ACT FOR A.Y. 2014-15 THE A. O. HAS ACCEPTED THE COMPLETED CONTRA CT METHOD FOLLOWED BY THE ASSESSEE FIRM (SEE PAGE 76). IT WAS FURTHER SUBMITTED THAT A S THE PROJECT WAS NOT COMPLETED DURING THE YEAR UNDER CONSIDERATION, THE BOOKING AMOUNTS W ERE RECORDED AS 'ADVANCE' AND THE AO WHILE COMPLETING THE ASSESSMENT OF THE YEAR UNDE R CONSIDERATION ACCEPTED THAT 'SALES' WERE NOT RECORDED IN THE BOOKS OF THE ASSESSEE FIRM . THUS THE 'COMPLETED CONTRACT METHOD' FOLLOWED BY THE ASSESSEE FIRM IN THE YEAR U NDER CONSIDERATION IS ALSO ACCEPTED BY THE AO. IT WAS FURTHER SUBMITTED THAT THE ADDITION OF RS.9, 54,00,0007- MADE BY THE AO IS NOTHING BUT THE SALE CONSIDERATION RECORDED IN THE SEIZED PAPER, AS ALLEGED BY HIM, WITHOUT CONSIDERING THE EXPENSES INCURRED FOR CONST RUCTION OF THE BUILDING. THUS THE ACTION OF THE AO IS AGAINST THE FIRST PRINCIPLES OF INCOME-TAX. 5. IN THIS RESPECT A USEFUL REFERENCE IS REQ UIRED TO BE MADE TO PARA-17 OF THE ORDER OF THE COMMISSIONER (APPEALS), WHICH READS AS UNDER: '17. THE APPELLANT'S NEXT OBJECTION IS THAT THE AO SHOULD HAVE SPIED THE WRITINGS ON THE IMPUGNED SEIZED PAPER IN TOTALI TY. THE ASSESSING OFFICER HAS MADE ADDITION FOR THE RECEIPTS MENTIONED IN THE LOO SE PAPERS BUT HAS NOT ALLOWED THE EXPENDITURE WRITTEN ON THE SAME PAPER AND INCLU DED IN THE PROFIT CALCULATIONS. AS IS MENTIONED ABOVE, THE IMPUGNED LOOSE PAPERS SH OW TOTAL PROFIT OF RS.4.26 CR. AFTER TAKING INTO ACCOUNT TRIE EXPENDITURE AND CLOS ING STOCK. HERE I AGREE WITH THE APPELLANT THAT THE AX) CANNOT PICK AND CHOOSE BETWE EN THE ENTRIES ON THE SEIZED PAPERS. IF THE ENTRIES ARE TRUE, IT HAS TO BE TRUE IN ENTIRETY. THE AO CANNOT SAY THAT THE ENTRIES ARE ONLY PARTIALLY PRESUMED TO BE TRUE. THE CALCULATIONS ON THE IMPUGNED PAPER SHOW TOTAL INCOME INCLUDING SALES BY CHEQUE AND CASH, RECEIVABLE, DEVELOPMENT CHARGES, ETC. TO BE RS.11.1 5 CR. THE VALUE OF THE CLOSING STOCK IS TAKEN AT RS.10.07 CR. THUS THE TOTAL INCOM E IS WORKED OUT AT RS.21.22 CR. FROM THIS IS REDUCED 'COST' OF RS.16.96 CR. THUS TH E PROFIT FROM THE PROJECT HAS BEEN WORKED OUT AT RS.4.26 CR. I AGREE WITH THE APP ELLANT'S CONTENTION THAT IF THE CONTENTS OF THE IMPUGNED LOOSE PAPERS ARE PRESUMED TO BE TRUE U/S.!32(4A), THEN THE ADDITION SHOULD NOT BE MORE THAN THE PROFIT WOR KED OF RS.4.26 CR. THE AO CANNOT MAKE DISALLOWANCE OF THE 'COST' RECORDED ON THE SAME PAPER. THE AO IS THEREFORE DIRECTED TO RESTRICT THE ADDITION TO RS.4 .26 CR. AS AGAINST 9.54 CR. ADDED BY THE AO.' 6. AGAINST THE AFORESAID ADDITION OF RS.4.26 CRORE S, THE ASSESSEE FIRM IS IN APPEAL BEFORE THE HON'BLE APPELLATE TRIBUNAL. IN THIS RESP ECT, IT IS SUBMITTED THAT IT CANNOT BE DISPUTED THAT THE SEIZED PAPER PAGE NO.9 CONTAINS E STIMATED FIGURES AND SECONDLY, IT REFERS TO THE PROJECT WHICH ON COMPLETION AND ON COMPLETE SALE MIGHT GENERATE PROFIT OF RS.4.26 CRORES. . THEREFORE, THE ESTIMATED FIGURES IN THE LOOSE PAPER S CANNOT BE THE BASIS FOR DETERMINING THE INCOME OF THE ASSESSEE FIRM MORE SO WHEN IT IS NOT IN DISPUTE THAT THE 9 ITA NOS. 2707& 2408/MUM/2017 PROJECT OF THE ASSESSEE WAS COMPLETED ON 25 1 MARCH, 2013 AND NOT IN THE YEAR ENDED 31 ST MARCH, 2012. SECONDLY, THE ASSESSEE FIRM HAS NOT BE EN ABLE TO SALE ALL THE PREMISES IN THE BUILDING CONSTRUCTED BY IT AND ABOUT 45% OF THE PRE MISES ARE UNSOLD AS ON 31 ST MARCH, 2018. IT IS, THEREFORE, SUBMITTED THAT THE FINAL PR OFIT ON COMPLETION OF THE PROJECT IS NOT DETERMINABLE AS OF DATE. IT IS, THEREFORE, SUBMITTE D THAT THE PROFIT OF RS.4.26 CRORES, AS PER THE SEIZED PAPER, CAN BE TAXED IN THE HANDS OF THE ASSESSEE ONLY IF IT CAN BE PROVED THAT THE PROJECT REFERRED TO IN THE SEIZED PAPER IS COMPLETE D AND COMPLETELY SOLD IN THE YEAR UNDER CONSIDERATION. IT IS NOT IN DISPUTE THAT THE PROJECT UNDERTAKEN BY THE ASSESSEE FIRM AT NAVI MUMBAI, THOUGH COMPLETED IN RESPECT OF THE CONSTRUC TION IN THE MONTH OF MARCH, 2013, IS NOT YET COMPLETELY SOLD, AS AROUND 45% OF THE CARPE T AREA OF THE BUILDING CONSTRUCTED BY THE ASSESSEE FIRM HAS NOT BEEN SOLD TILL DATE AND W HATEVER PORTION SOLD IS DISCLOSED AND OFFERED FOR TAXATION IN THE RESPECTIVE YEARS. IN THIS RESPECT A USEFUL REFERENCE CAN BE MADE TO T HE ASST, ORDER U/S.143(3) OF THE ACT FOR A.Y. 2014-15 OF THE ASSESSEE FIRM (PAGES 75 TO 77) WHERE IN THE AO. AFTER SCRUTINISING THE BOOKS OF ACCOUNT AND THE AUDITED F INANCIAL STATEMENTS, HAS ACCEPTED THAT THE PROJECT IS NOT YET COMPLETED AND THEREFORE, THE ASSESSEE FIRM HAS SHOWN WORK-IN- PROGRESS OF RS.17,10,53,4377-(PAGE 76). A USEFUL REFERENCE CAN ALSO BE MADE TO THE ASST. OR DER U/S.143(3) OF THE ACT FOR A.Y. 2015-16 IN THE CASE OF THE ASSESSEE FIRM WHERE IN THE AO, AFTER SCRUTINISING THE BOOKS OF ACCOUNT AND THE AUDITED FINANCIAL STATEMEN TS, ACCEPTED THE RETURN OF INCOME DECLARING RS.NIL INCOME (PAGES 96 & 97). IN THE YEAR ENDED ON 31 ST MARCH, 2016, RELEVANT TO A.Y. 2016-17, THE ASSESSE E HAD RECORDED SALES OF RS.1.69 CRORES AND DECLARED LOSS WHICH HAS BEEN ACCEPTED U/S.143(1) OF THE ACT. IN THE PREVIOUS YEARS ENDING ON 31 ST MARCH, 2017 AND 31 ST MARCH, 2018, RELEVANT TO A.YS. 2017-18 AND 2018-19, THE ASSESSEE FIRM WAS ABLE TO SELL FIVE PREMISES AND THEREFORE, THE CLOSING INVENTORY OF STOCK AS ON 31 ST MARCH, 2018 WAS RS.8,11,46,862/-. THE AFORESAID FACTS, WHICH ARE SUPPORTED BY THE RET URNS OF INCOME FILED BY THE ASSESSEE FIRM FROM YEAR TO YEAR, PROVE THAT THE SEIZED PAPER WAS A PURE AND SIMPLE ESTIMATE AND IT DOES NOT DISCLOSE THE ACTUAL STATUS OF THE PROJECT AND IT WAS PREPARED SOMETIME IN THE YEAR 2011 OR 2012 FOR THE PURPOSE OF ESTIMATING THE PROF IT, ON THE PRESUMPTION THAT ALL THE PREMISES OF THE PROJECT ARE SOLD AND AT THE RATE AN TICIPATED IN THE SEIZED PAPER. HOWEVER, AS PER THE RETURN OF INCOME FOR A.Y. 2018-19, THE A SSESSEE FIRM HAS NOT BEEN ABLE TO SELL A PART OF THE PROJECT (AROUND 45%) AND THEREFORE, THE PROFIT ESTIMATED AS PER THE SEIZED PAPER CANNOT BE TREATED AS INCOME OF THE ASSESSEE F IRM, BECAUSE THE SAID PROFIT AS PER THE SEIZED PAPER IS AN ESTIMATE AND ON THE PRESUMPTION THAT ALL THE PREMISES OF THE PROJECT ARE SOLD AT THE EXPECTED RATE. THE AFORESAID FACTS ARE EXPLAINED IN THE FORM OF A CHART GIVING DETAILS FOR THE A.YS. 2012-13 TO 2018-19 WHICH IS A T PAGE 133 OF THE PAPER BOOK (VOL.-II). IT IS, THEREFORE, SUBMITTED THAT THE ADDITION CONFI RMED BY THE COMMISSIONER (APPEALS) OF RS.4.26 CRORES BEING THE PROFIT ON COMPLETION OF PR OJECT IS INCORRECT AND CONTRARY TO THE FACTS ON THE RECORD OF THE A.O, AND THE SAME MAY BE DELETED. 7. AT THIS JUNCTURE IT IS ALSO REQUIRED TO BE NOTED THAT THE FIGURE OF 4.26 CR. BECAUSE THE SAID FIGURE IS ARRIVED AT BY ADDING 'PAYMENT BA LANCE OF RS.1 CR. AS THE GROSS SALE FIGURE OF RS.9.54 CR. IS INCLUSIVE OF THE FROM PU RCHASERS. 13. THEREAFTER, THE LD. COUNSEL OF THE ASSESSEE REF ERRED TO SEVERAL CASE LAWS: 10 ITA NOS. 2707& 2408/MUM/2017 1. ASST. CIT VS. SHAILESH S. SHAH (63 ITD 153 MUM) 2. RAJPAL SINGH RAM AUTAR VS. ITO (39 TTJ 544, DEL) 3. ACIT VS. DR. KAMLA PRASAD SINGH (2010) 3 ITR (TRIB. ) 533 (PATNA) 4. NEM CHAND DAGA VS. ACIT (2005) 1 SOT 515 (DELHI) 5. CIT VS. PRAVEEN JUNEJA (ITA NO. 56 OF 2017 DATED 14 TH JULY, 2017) 6. ACIT VS. SATYAPAL WASSAN (295 ITR 352 (JABALPUR-TRI B) 7. DCIT VS. M/S. RAJ HOMES S. V. GROUP (IN ITA NO. 240 8/MUM/2017) 14. AS REGARDS THE REVENUES APPEAL, THE LD. COUNSE L OF THE ASSESSEES SUBMISSIONS READ AS UNDER: 14. IN RESPECT OF THE APPEAL OF THE AO, AT THE OUTS ET, THE ASSESSEE RELIES ON THE FINDINGS RECORDED BY THE COMMISSIONER (APPEALS) WHILE REJECT ING THE CONTENTIONS OF THE AO FOR MAKING ADDITION OF RS.9.54 CRORES TO THE INCOME OF THE ASSESSEE FIRM. IN THIS RESPECT, IT IS FURTHER SUBMITTED THAT THE AO FOR HIS CONVENIENCE I NTERPRETED SEIZED PAPER NO. 9 AS RECEIPT OF RS.5.22 CORES AS THE SALE PROCEEDS BY CH EQUE AND THE RECEIPT OF RS.4.32 CRORES BY CASH FOR WHICH THE AO'S CONTENTION WAS THAT THE FIGURE '2' IS SHOWN AGAINST THE FIGURE OF '4.32'. THAT MEANS, RS.4.32 CRORES ARE CASH RECE IPTS AND HENCE THE AO HAD ADDED RS.9.54 CRORES TO THE INCOME OF THE ASSESSEE FIRM. THE SAID CONTENTION OF THE AO HAS BEEN REJECTED OUT RIGHTLY BY THE CIT(A) ON THE GROUND TH AT EVEN IF ALL THE CONTENTIONS OF THE AO ARE ACCEPTED (AS GOSPEL TRUTH), EVEN THEN, RS.9.54 CRORES IS A GROSS RECEIPT WHICH CANNOT BE ADDED UNLESS THE EXPENDITURES INCURRED TO EARN T HE SAID AMOUNT ARE DEDUCTED THEREFROM. THEREFORE, THE COMMISSIONER (APPEALS) HA S DELETED RS.9.54 CRORES ADDED BY THE AO. 15. IN THIS RESPECT, IT IS FURTHER SUBMITTED THAT IT IS A VERY WILD GUESSWORK OF THE AO FOR HIS CONVENIENCE TO PRESUME THAT THE FIGURE OF ' 4.32' IS THE RECEIPT BY THE ASSESSEE ON SALE OF PREMISES IN CASH BECAUSE THE FIGURE '2' IS WRITTEN AHEAD OF IT. FOR THIS CONCLUSION OF THE AO, THERE IS NOT AN IOTA OF EVIDENCE FOUND I N THE COURSE OF THE SEARCH AT THE PREMISES OF THE ASSESSEE FIRM. NOT ONLY THAT IN THE COURSE OF THE SEARCH, NO CASH WAS FOUND NOR ANY UNACCOUNTED INVESTMENT WAS FOUND, WHI CH IS NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FIRM. IT IS, THEREFORE, SUB MITTED THAT RECEIPT OF CASH OF RS.4.32 CRORES BY THE ASSESSEE ON SALE OF PREMISES IS NOT O NLY BASELESS BUT IT IS CONTRARY TO THE FACTS ON RECORD. IN THIS RESPECT, IT IS SUBMITTED T HAT THE ASSESSEE HAD ENTERED INTO VARIOUS AGREEMENTS FOR SALE OF VARIOUS PREMISES AND MANY OF THEM WERE REGISTERED AND MANY OF THEM WERE NOT REGISTERED. THE ASSESSEE HAD CONSIDER ED IN THE A.YS. 2015-16 AND 2016-17 ONLY THOSE SALES WHERE THE AGREEMENTS ARE EXECUTED AND REGISTERED, BALANCE CONSIDERATIONS ARE RECEIVED AND POSSESSION OF THE PREMISES ARE GIVEN T O THE PURCHASERS. ALL OTHER AGREEMENTS ARE NOT CONSIDERED AS SALES, A S THE SALE WAS NOT COMPLETED DUE TO NON-RECEIPT OF BALANCE CONSIDERATION AND NOT HANDIN G OVER OF THE POSSESSION OF THE PREMISES SOLD IN THE BUILDING CONSTRUCTED BY THE AS SESSEE FIRM. 16. IT APPEARS THAT WHEN THE SEIZED PAPERS WERE PR EPARED SOMETIME IN THE YEAR 2011 OR 2012, THE ASSESSEE FIRM HAD ENTERED INTO VARIOUS AGREEMENTS WITH VARIOUS PURCHASERS FOR SALE OF THE PREMISES IN THE PROJECT. HOWEVER, S OME OF THE AGREEMENTS WERE NOT REGISTERED. THEREFORE, THOSE AGREEMENTS WHICH WERE REGISTERED WERE INCLUDED IN THE LIST KNOWN AS '1', THE DETAILS OF WHICH ARE AT PAGE-6 OF THE PAPER BOOK. ON PERUSAL OF PAGE 6, IT WILL BE SEEN THAT AS ON 31 ST MARCH, 2012, THE ASSESSEE FIRM HAD EXECUTED AND REG ISTERED VARIOUS AGREEMENTS FOR WHICH AGGREGATE AGREEMENT VA LUE WAS RS.4,96,25,3007-. 11 ITA NOS. 2707& 2408/MUM/2017 SIMILARLY, ON 31 ST MARCH, 2012, THERE WERE AGREEMENTS EXECUTED BUT NO T REGISTERED, THE DETAILS OF WHICH ARE AT PAGE-7, AND THE AGGREGATE A GREEMENT VALUE OF SUCH AGREEMENTS (NOT REGISTERED) WAS RS.4,85,05,5387-. THESE AGREEM ENTS APPEAR TO HAVE BEEN SHOWN IN THE LIST KNOWN AS '2' IN THE SEIZED PAPER. 17. IT IS, THEREFORE, SUBMITTED THAT THE PRESUMPTI ONS AND ALLEGATIONS OF THE AO THAT THE ASSESSEE FIRM HAD RECEIVED CASH OF RS.4.32 CRORES A RE NEITHER BORNE OUT BY THE RECORD OF THE ASSESSEE FIRM NOR BY THE SEIZED PAPERS FROM ANY ANGLE NOR BY ANY EVIDENCE FOUND IN THE SEARCH. 15. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) SUPPORTED THE ORDERS OF THE A.O. HE SUBMITTED THAT THE ADDITIONS HAVE BEEN DULY MADE ON THE BASIS OF THE NOTINGS IN THE LOOSE SHEET. HE SUBMITTED THAT T HE ASSESSEE NOT BEEN ABLE TO REBUT THE NOTINGS AND THE ADDITIONS MADE IS PERFECTLY JUSTIFI ED. IN THIS REGARD, THE SUBMISSION OF THE LD. DR READ AS UNDER: THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF BUILDER, DEVELOPER & CONTRACTOR. THE ASSESSEE FIRM HAD CONSTRUCTED/DEVEL OPED THE PROJECT 'PRIME MALL' AT PLOT NO. D-66, SECTOR 12, KHARGHAR, NAVI MUMBAI. PAGE 2 AND 9 OF BUNDLE NO.2 OF PARTY NO. TR-2 SEIZED FROM THE RESIDENTIAL PREMISES OF SH RI SHANKARLAL V. THAKKAR SHOWS WORKING OF VARIOUS ITEMS OF COST AND TOTAL EXPENSES ON THE PROJECT. TOTAL COST SHOWN ON THE PAGE WAS RS.16.96 CRORES AND TOTAL SALES WERE 9 .54 CRORES( RS.5.22 CRORES AND RS.4.32 CRORES). THE FURTHER DETAILS WRITTEN ON THE SEIZED DOCUMENT WERE AS FOLLOWS: UNSOLD STOCK - 10.07 CRORES BAKI PAYMENT 1 CRORES AND DEVELOPMENT CHARGES .61 C RORES. TOTALING TO RS.21.22 CRORES AGAINST THE ABOVE EXPENSES OF RS.16.96 CRORES WERE SHOWN. ON THE REVERSE SIDE OF PAGE NO. 9 THE ASSESSEE HAD NOTED SALES OF RS.5.22 CRORES. THE WORD VECHAN' WAS WRITTEN ON TOP OF THE NOTINGS WHIC H MEANS SALES IN GUJARATI LANGUAGE. IT WAS ALSO SEEN THAT THE AMOUNT OF RS.5.22 CRORES WERE NOT OFFERED FOR TAXATION BY THE ASSESSEE. VIDE ORDER SHEET DATED 18.03.2015, IT WAS SPECIFICA LLY PROPOSED TO ADD UNDISCLOSED SALES OF RS.5.22 CRORES AND CASH COMPONENT OF RS.4.32 CRO RES BEING UNDISCLOSED SALES AND UNDISCLOSED CASH COMPONENT RECEIVED BY THE ASSESSEE . IN RESPONSE THE ASSESSEE ATTENDED ON 20.03.2015 AND REQUESTED FOR ADJOURNMENT. FOLLOW ING THE PRINCIPLE OF NATURAL JUSTICE, THE HEARING WAS ADJOURNED TO 24.03.2015. HOWEVER ON THE DATE OF HEARING NEITHER ATTENDED NOR SUBMITTED ANY DETAILS AS CALLED FOR. T HE ASSESSEE ALSO HAD NOT SUBMITTED ANY REASON FOR NON-ATTENDANCE AND NON- SUBMISSION OF RE QUIRED DETAILS. HENCE IN ABSENCE OF ANY SATISFACTORY REPLY DURING T HE COURSE OF SEARCH PROCEEDINGS AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS , AN AMOUNT OF RS.5,22,00,000/- ON ACCOUNT OF UNDISCLOSED SALES AND AN AMOUNT OF RS.4, 32,00,000/- ON ACCOUNT OF ON MONEY WERE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 16. UPON CAREFUL CONSIDERATION WE FIND THAT THE ADD ITION IN THIS CASE IS A RESULT OF SEARCH CONDUCTED WHEREIN LOOSE SHEET BEING PAGE NO. 9 AND SCRIBBLING IN FRONT OF THE SAID 12 ITA NOS. 2707& 2408/MUM/2017 PAGE IS THE SOLE BASIS. WHILE ANALYZING THE SCRIBBL ING AS MENTIONED IN THE ORDER OF THE A.O. REPRODUCED IN PARA 5 ABOVE, THE A.O. HAS CONSI DERED THAT IT REVEALS UNDISCLOSED SALES OF RS.5.22 CRORES AND CASH COMPONENT OF RS.4.32 CRO RES WHICH HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) WHILE CONSID ERING THE ISSUE HAS NOTED THAT THE SCRIBBLING IN THE SAID FRONT SIDE OF PAGE NO. 9 SHO W THAT THE DISCLOSED PROFIT WOULD BE RS.4.62 CRORES. HENCE, HE WAS OF THE OPINION THAT O NLY RS.4.62 CRORES CAN BE ADDED AND NO FURTHER ADDITION IS JUSTIFIED. IN THIS REGARD, W E NOTE THAT THE A.O. IN HIS ORDER HAS NOTED THAT ON THE REVERSE SIDE OF PAGE NO. 9, THE ASSESS EE HAS NOTED SALES OF RS.5.82 CRORES. THAT THE ASSESSEE HAS RECORDED SALES OF RS.4 CRORES BASE D ON TOTAL EXPENSES OF RS.17 CRORES. HOWEVER, THE A.O. HAS REJECTED THIS NOTINGS BY OBSE RVING THAT LOSS OF RS.4 CRORES IS NOT ACTUALLY A LOSS, SINCE UNSOLD STOCK HAS NOT BEEN IN CLUDED IN THIS CALCULATION WHICH HAS BEEN DONE ON THE FRONT PAGE WHERE THE FIGURE ARRIVE D IS RS.4.62 CRORES. 17. IN THIS REGARD, WE NOTE THAT IT IS THE SUBMISSI ONS OF THE ASSESSEE THAT LOOSE SHEET SCRIBBLING ARE MERELY ESTIMATES AND DE HORS ANY CORROBORATIVE EVIDENCE, THE ADDITIONS SOLELY BASED ON THESE LOOSE SHEETS SCRIBBLING CANNO T BE MADE. WE FIND THAT THIS SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE HAS C ONSIDERABLE COGENCY. THE SAID LOOSE SHEET WAS FOUND FROM THE RESIDENCE OF ONE OF THE PA RTNERS. IT DOES NOT MENTION THE NAME OF THE ASSESSEE FIRM DIRECTLY OR INDIRECTLY. MOREOV ER, THE SAID NOTINGS ARE ALSO NOT CLAIMED TO BE RECORDED IN THE HANDWRITING OF SHRI SHANKARLA L VIRJI THAKKAR OR ANY OTHER PARTNERS OF THE ASSESSEE FIRM. IN THIS REGARD, WE PLACE RELI ANCE UPON THE HON'BLE APEX COURT DECISION IN THE CASE OF CIT VS. P. V. KALYANASUNDARAM [2007] 294 ITR 49 (S.C.), 13 ITA NOS. 2707& 2408/MUM/2017 WHEREIN IT WAS HELD THAT THE ADDITION SOLELY BASED UPON LOOSE SHEETS SCRIBBLING DE HORS ANY CORROBORATIVE FINDINGS, IS NOT JUSTIFIED. 18. THE ABOVE ISSUE CAN BE EXAMINED FROM ANOTHER PO INT OF VIEW ALSO. IT IS SETTLED LAW THAT WHEN A DOCUMENT IS TO BE RELIED, IT HAS TO BE RELIED UPON IN THE WHOLE. ONE CANNOT ACCEPT PART OF THE DOCUMENT AND REJECT THE OTHER PA RT. THIS IS ENSHRINED IN THE COMMON LAW MAXIM OF APPROBATE AND REPROBATE. THIS COMMON L AW MAXIM WAS REITERATED BY THE HON'BLE APEX COURT IN THE CASE OF SUZUKI PARASRAMPURIA VS. THE OFFICIAL LIQUIDATOR OF MAHENDRA PETROCHEMICALS LTD. (IN LIQUIDATION AND OT HERS) (IN CIVIL APPEAL NO. 10322 OF 2017 DATED 08.10.2018). EXAMINING ON THE TOUCH STON E OF THE ABOVE SAID MAXIM, IT IS NOTED THAT WHILE IN THE SAID LOOSE SHEET RS.4.26 CR ORES PROFIT IS MENTIONED ON THE FRONT SIDE. ON THE BACK SIDE OF THE SAME PAGE THERE WERE NOTINGS OF RS.17 CRORES EXPENDITURE AND THE LOSS WAS NOTED AT RS.4 CRORES. HENCE, WHEN THE OVERALL DOCUMENT IS CONSIDERED, NO ADDITION FOR ANY PROFIT IS WARRANTED. THOUGH AS ALREADY NOTED BY US ABOVE, THESE LOOSE SHEETS CANNOT BE A BASIS FOR ADDITION DE HORS ANY CORROBORATIVE FINDINGS. THE OTHER ASPECTS OF THE SUBMISSIONS OF THE LD. COU NSEL OF THE ASSESSEE ALSO SUPPORT THE ABOVE PROPOSITION. IT IS NOTED THAT NO DEFECT HAS BEEN FOUND IN THE BOOKS OF ACCOUNTS. THE PROFITS IN THE PAST AND IN THE FUTURE HAVE BEEN DULY ACCEPTED. IT IS UNDISPUTED THAT THE PROJECT IS NOT COMPLETED IN THE CURRENT ASSESSMENT YEAR. HENCE ON THE BASIS OF THE METHOD OF ACCOUNTING APPLIED BY TH E ASSESSEE, NO ADDITION IS WARRANTED, MUCH LESS ON THE BASIS OF SCRIBBLING ON ROUGH NOTE, THAT ALSO BY PICKING UP CERTAIN FIGURES AND IGNORING OTHER. 14 ITA NOS. 2707& 2408/MUM/2017 19. THUS, IN THE CONSPECTUS OF THE AFORESAID DISCUS SION AND CASE LAW, WE HOLD THAT THE ADDITIONS BASED UPON SELECTIVE SCRIBBLING IN ROUGH NOTE DE HORS ANY CORROBORATIVE FINDING, IS NOT JUSTIFIED. MOREOVER, IF THE SCRIBBLING IN TH E NOTE IS EXAMINED ON THE TOUCH STONE OF THE COMMON LAW MAXIM OF APPROBATE AND REPROBATE, TH E ADDITION IS FURTHER NOT JUSTIFIED. 20. IN THE RESULT, THIS APPEAL BY THE REVENUE IS DI SMISSED AND THAT BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH MARCH, 2019. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 07.03.2019 ROSHANI, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI