Appeal Details
Counselvise Citation
[2021] 109 COUNSELVISE.COM (IT) 1748 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 3 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-02-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
03-12-2020
Assessment Year
2013-2014
Appeal Filed On
24-10-2019
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER REVENUE BY SHRI S.S. MANTRI, CIT APP ELLANT BY S/ SHRI ASHISH GOYAL N.D. PATWA, ARS DATE OF HEARING 06.01.2021 DATE OF PRONOUNCEMENT 16 . 0 2 .202 1 O R D E R PER BENCH THE ABOVE CAPTIONED APPEALS BY THE REVENUE PERTAIN ING TO ASSESSMENT YEARS 2008-09, 2009-10, 2011-12, 2012-13 AND CROSS APPEALS BY THE ASSESSEE AND REVENUE FOR ASSESSMENT YEARS 2013-14 IT(SS)A NO.83,84,86,87,109,110/IND/2019, ASSESSMENT YEARS: 2008-09, 2009-10, 2011-12, 2012- 13, 2013- 14 & 2014-15 JCIT (OSD), CENTRAL-1 BHOPAL VS. M/S. AG8 V E NTURES LTD, 206, SHRISHTI COMPLEX, ZONE-II, M.P. NAGAR, BHOPAL (REVENUE ) (APPELLANT) PAN NO. AADCA1214E IT(SS)A NO.90,91 & ITA NO.922 &923/IND/2019 ASSESSMENT YEARS: 2013-14 & 2014-15 M/S. AG8 V E NTURES LTD, 206, SHRISHTI COMPLEX, ZONE-II, M.P. NAGAR, BHOPAL VS. JCIT (OSD), CENTRAL-1 BHOPAL (APPELLANT) (REVENUE ) PAN NO.AADCA1214E IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 2 AND 2014-15 ARE DIRECTED AGAINST THE YEARWISE ORDER S OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-3, BHOPAL (IN S HORT LD. CIT(A)) DATED 25.02.2019 (A.Y. 2008-09), 25.02.20 19 (A.Y. 2009- 10), 27.02.2019 (A.Y. 2011-12), 27.02.2019 (A.Y. 20 12-13), 25.03.2019 (A.Y. 2013-14) AND 25.03.2019 (A.Y. 2014 -15); AGAINST THE CONSOLIDATED ASSESSMENT ORDER U/S. 153A / 143(3 ) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PASSED ON 30.03.2016 FRAMED BY DCIT-CENTRALI (IN SHORT LD. A.O). FURT HER, ASSESSEES APPEAL IN ITA 922/IND/2019 IS THE PENALTY APPEAL U/ S. 271(1)(C) FOR A.Y. 2013-14 AGAINST THE PENALTY LEVIED BY THE LD. CIT(A) VIDE HIS ORDER DATED 22.07.2019. ALSO, ASSESSEES APPEAL ITA 923/ IND/ 2019 IS THE PENALTY APPEAL U/S. 271AAB(1)(C) FOR A. Y. 2014-15 AGAINST THE PENALTY LEVIED BY THE LD. CIT(A) VIDE H IS ORDER DATED 09.08.2019. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE REC ORDS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPER AND BUILDER. ON 06.08.2013, A SURVEY U/S. 133A WAS CARRIED OUT AT THE PREMISES AND BUIDLING PROJECTS R UN BY THE ASSESSEE-COMPANY. SUBSEQUENTLY, A SEARCH U/S. 132 W AS ALSO IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 3 CARRIED ON 29-31 JANUARY 2014 AT THE BUSINESS PLACE OF ASSESSEE COMPANY AND RESIDENTIAL PREMISES OF DIRECTORS. VARI OUS BOOKS OF ACCOUNTS AND DOCUMENTS WERE SEIZED. 3. AFTER THE SEARCH AND SURVEY OPERATION, NOTICE U /S. 153A WAS ISSUED FOR FILING OF RETURN. RETURNS OF INCOME WERE THEREAFTER FILED BY THE ASSESSEE AS UNDER: A.Y. PB DATE OF FILING RETURN U/S. 139(1) TOTAL INCOME DATE OF FILING RETURN U/S. 153A TOTAL INCOME IN RETURN U/S. 153A ADDL INCOME 2008-09 12-44 27.02.2009 2,08,45,740 23.09.2015 2,0 8,45,740 NIL 2009-10 47-68 26.12.2009 3,22,68,100 23.09.2015 3,2 2,68,100 NIL 2010-11 ** 71-98 01.04.2011 7,94,27,760 23.09.2015 7,94,27,760 NIL 2011-12 146-166 30.09.2011 12,72,20,780 23.09.2015 12,72,20,780 NIL 2012-13 167-206 31.03.2013 17,41,09,640 23.09.2015 17,41,09,640 NIL 2013-14 213-245 12.11.2014 11,04,36,150 23.09.2015 11,04,36,150 NIL 2014-15 257-291 12.11.2014 8,48,71,480 N.A. 8,48,71 ,480 NIL ** THE APPEAL OF DEPARTMENT HAS BEEN DISMISSED ON A CCOUNT OF LOW TAX EFFECT. 4. AFTER CONSIDERING ALL THE DOCUMENTS AND AFTER DE TAILED INQUIRIES, A CONSOLIDATED ASSESSMENT ORDER WAS PASS ED U/S. 153A R/W SECTION 143(3) ON 30.03.2016, MAKING ADDITION O N VARIOUS GROUNDS. THEREAFTER THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LD CIT(A) WHO VIDE THE YEAR-WISE IMPUGED ORDERS DELETE D PART OF THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 4 ADDITIONS. AGAINST THE ORDERS OF LD CIT(A) BOTH THE ASSESSEE AND DEPARTMENT ARE IN APPEAL. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE DEPA RTMENT:- IT (SS)A 83/IND/2019 A.Y. 2008-09 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 75,00,000/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE U/S 40A(3) OF INCOME TAX ACT 1961. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 23,00,000 /- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,60,73,981/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE CLAIMED U/S 80IB (10) OF INCOME TAX ACT. 1961. 4. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,29,271/- MADE BY THE A.O. ON ACCOUNTS OF DISALLOWANCE OF EXPENSES U/S 14A R. W. R. 8D OF THE INCOME TAX RULES. IT(SS)A 84/IND/2019 A.Y. 2009-10 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,96,677/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED PAYMENTS TO RAJEEV SONI. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING OF RS. 67,51,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION O RS. 3,56,08,183/- MADE B Y THE A.O. ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB (10) OF INCOME TAX ACT, 1961. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 5 4. ON THE FACT AND IN THE CIRCUMSTANCES OF THE LD. CIT (A) GAS ERRED IN DELETING THE ADDITION OF RS. 25,36,515/- MADE BY TH E A.O. ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S 14A R.W.R. 8D OF THE I NCOME TAX RULES. IT(SS)A 86/IND/2019 A.Y. 2011-12 1. ON THE FACT THE CIRCUMSTANCES OF THE CASE THE LD. C IT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 43,38,292/- MADE BY TH E A.O. ON ACCOUNT OF INVESTMENT NOT FULLY DISCLOSED IN BOOKS OF ACCOUNTS . RELIANCE IS PLACED ON THE DECISION OF HON,BLE M.P. HIGH COURT IN THE CASE OF CIT VS ABEESON HOTELS PVT. LTD. (2004) 191 CIT MP 263. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,00,000/- MADE BY THE A.O. ON ACCOUNTS OF UNACCOUNTED RECEIPTS. 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 21,00,000/- MADE BY TH E A.O. ON ACCOUNTS OF UNEXPLAINED INVESTMENT. 4. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE LD . CIT (A) ERRED IN DELETING THE ADDITION OF RS. 3,16,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT. 5. ON THE FACT IN THE CIRCUMSTANCES OF THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 3,16,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 6. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,96,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED PAYMENTS TO RAJEEV SONI. 7. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 30,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED EXPENDITURE. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 6 8. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE OF THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 79,22,875/- M ADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF DEDUCTIBLE EXPENDITURE. 9. ON THE FACT AND IN THE CIRCUMSTANCE OF THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,56,43,283/- MADE BY THE A.O. ON ACCOUNT OF ON MONEY PAYMENTS ON THE SALE OF UNITS/PLOT OF HIG HLAND PROJECT. 10. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,68,13,834/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB (10) OF INCOME TAX ACT, 1961. 11. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,19,22,476/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S 14 R.W.R 8D OF THE INCOME TAX RULES. IT(SS)A 87/IND/2019 A.Y. 2012-13 1. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,18,74,359/- MADE BY THE A.O. ON ACCOUNT OF INVESTMENT NOT FULLY DISCLOSED IN BOOKS OF ACCOU NT. RELIANCE IS PLACED ON THE DECISION OF HONBLE M.P. HIGH COURT IN THE CAS E OF CIT VS ABEESON HOTELS PVT. (2004) 191 CTR MP 263. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 68,50,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED RECEIPTS. 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 54,62,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT. 4. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 51,000/- MADE BY TH E A.O. ON ACCOUNT OF DISALLOWANCE U/S 40A (3) OF INCOME TAX ACT, 1961. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 7 5. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,81,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 6. ON THE FACT AND IN THE CIRCUMSTANCE OF CASE THE LD . CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,00,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 7. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,96,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED PAYMENTS TO RAJEEV SONI. 8. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITIONAL OF RS. 1,16,60,000/- MAD E BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE . 9. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,77,65,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 10. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 70,08,192/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF DEDUCTION EXPENDITURE. 11. ON THE FACT AND IN THE CIRCUMSTANCE OF THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 15,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED RECEIPTS. 12. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,67,71,771/- MADE BY THE A.O. ON ACCOUNT OF ON MONEY PAYMENT ON THE SALE OF UNITS/PLOT OF HI GHLAND PROJECT. 13. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,51,98,000/- MADE BY THE A.O. ON ACCOUNT DISALLOWANCE OF EXPENSES U/S 14A R.W.R 8D OF THE IN COME TAX RULES. IT(SS)A 109/IND/2019 A.Y. 2013-14 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 8 1. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 6,17,61,538/- MADE BY THE A.O. ON ACCOUNT OF INVESTMENT NOT FULLY DISCLOSED IN BOOKS OF ACCOUNT. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,20,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED CASH RECEIPTS. 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,20,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED MONEY. 4. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,28,64,700/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED RECEIPTS. 5. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 55,24,697/- MADE BY THE A.O. 0N ACCOUNT OF UNACCOUNTED EXPENDITURE. 6. ON THE FACT CIRCUMSTANCES OF THE CASE THE LD. CIT ( A) HAS ERRED IN DELETING THE ADDITION OF RS. 8,50,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED RECEIPTS. 7. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 60,000/- MADE BY TH E A.O. ON ACCOUNT OF DISALLOWANCE U/S 40A(3). 8. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE LD . CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,34,78,580/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 9. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD.CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,96,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED PAYMENTS. 10. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 9 11. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 12. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 6,39,49,728/- MADE BY THE A.O. ON THE ACCOUNT OF DISALLOWANCE OF DEDUCTIBLE EXPENDITURE. 13. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 10,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED RECEIPTS. 14. ON THE FACT AND THE CIRCUMSTANCE OF THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,11,43,000/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S 14A R.W.R. 8D OF THE I NCOME TAX RULE. IT(SS)A 110/IND/2019 A.Y. 2014-15 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 14,77,100/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED MONEY. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 11,78,40,913/- MADE BY THE A.O. ON ACCOUNT OF INVESTMENT NOT FULLY DISCLOSED IN BOOKS OF ACCOU NT 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,40,06,795/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED RECEIPTS. 4. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 7,12,72,179/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 5. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 10,00,000/- MADE B Y THE A.O. ON ACCOUNT OF UNACCOUNTED RECEIPTS. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 10 6. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,96,000/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED PAYMENTS. 7. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,00,000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 8. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 40,00,000/- MADE B Y THE A.O. ON ACCOUNT OF UNACCOUNTED RECEIPTS. 9. ON THE FACT AND THE CIRCUMSTANCE OF THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,09,10,000/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S 14A R.W.R. 8D OF THE I NCOME TAX RULE. 5. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSES SEE:- IT(SS)A 90/ IND/ 2019 A.Y. 2013-14 1. THE ORDER PASSED U/S. 153A/ 143(3) BY LOWER AUTHORI TIES IS ILLEGAL, INVALID, AND UNTENABLE IN LAW. THE SAME BE KINDLY CANCELLED 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN MAKING ANY ENHANCEMENT OF RS. 2.00 CRO RE AND IN ADJUSTING THE SAME AGAINST THE INCREASE IN EXCESS PROFIT ON THE S ALE OF AAKRITI HIGH LAND PLOTS AT RS. 4,34,08,100/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN ADOPTING THE PLOT SALE VALUE OF AAKRIT I HIGH LAND AT RS. 43,40,81,000/- OF BOOKING VALUE IN PLACE OF REGISTE RED VALUE OF RS. 1,33,27,660/-. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING THE ALTERNATIVE PROPOSAL OF THE APPELLANT THAT IT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 11 MAY BE HELD THAT THE APPELLANT GOT 5% OR 7.50% EXCE SS MONEY ON THE SALE OF 5% OR 7.50% PLOTS OF AAKRITI HIGH LAND. 5. THE APPELLANT CARVES LEAVE, TO ADD, TO ALTER AND/ O R TO MODIFY THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. IT(SS)A 91/ IND/ 2019 A.Y. 2014-15 1. THE ORDER PASSED U/S. 143(3) BY LOWER AUTHORITIES I S ILLEGAL, INVALID, AND UNTENABLE IN LAW. THE SAME BE KINDLY CANCELLED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 87,97,1 13/- AND ENHANCING THE SAID ADDITION TO RS. 28.00 CRORE BY MAKING THE ADDI TION OF RS. 27,16,02,887/- SIMPLY ON THE BASIS OF HALF HEARTED AND RETRACTED STATEMENT RECORDED IN THE MIDNIGHT OF ONE OF THE DI RECTORS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING/ MAKING THE ADDITION OF RS. 28.00 CRORE WITHOUT HAVING ANY COLLABORATIVE AND SUPPORTIVE EVIDENCE FO R THE SAID INCOME OF THE ASSMT. YEAR 2014-15. 4. THE APPELLANT CARVES LEAVE, TO ADD, TO ALTER AND/ O R TO MODIFY THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 6. WE WILL FIRST TAKE THE REVENUES APPEALS YEAR-WI SE AND IF COMMON GROUNDS ARE RAISED FOR MULTIPLE YEARS, SAME WILL BE DEALT TOGETHER. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 12 7. GROUND NO. 1 FOR A.Y. 2008-09 IN THE REVENUES A PPEAL IN IT(SS)A 83/IND/2019 RELATES TO DISALLOWANCE U/S. 40 A(3) OF THE INCOME-TAX ACT, 1961 TO THE TUNE OF RS. 75,00,000/- . 8. THE FACTS AS CULLED FROM THE RECORDS ARE THAT TH E LEARNED ASSESSING OFFICER (IN SHORT LD.AO) FOUND DURING T HE ASSESSMENT PROCEEDINGS U/S. 153A THAT THE APPELLANT MADE C ASH PAYMENTS TO SOME SELLERS I.E. SMT. AYODHYA PATIDAR, SHRI RAMKUWAR PATIDAR AND KRISHNA PATIDAR, DURING THE CURRENT YE AR, FOR THE PURCHASE OF 3.95 ACRES OF AGRICULTURAL LAND SITUA TED AT VILLAGE SALAIYA IN THE F.YR. 2007-08. THE LD. AO TREATED TH E CASH PAYMENTS FOR PURCHASE OF LAND AT RS.75,00,000/- AS A DISA LLOWABLE EXPENSE U/S.40A(3) OF THE ACT SINCE IT BEING PART OF STOCK IN TRADE AND CLAIMED AS REVENUE EXPENDITURE . THE LD. ASSESSING OFFICER HAD RAISED THE OBJECTIONS TO THE EXPLANATIONS FILED BY THE APPELLANT VIDE HIS ORDER IN PARA 19.3 AT PAGE 65-66, WHICH ARE REP RODUCED AS UNDER:- I. THE CASH PAYMENTS ARE MADE FOR PURCHASE OF LAND WH ICH IS STOCK IN TRADE OF THE ASSESSEE AND THEREFORE, THE PROVISIONS OF SEC. 40A(3) ARE CLEARLY APPLICABLE IN ASSESSEES CASE. II. THE ASSESSEES CASE IS NOT COVERED U/R. 6DD OF THE IT RULE R.W.S. 40A(3) IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 13 III. THE ASSESSEES CONTENTION THAT CASH PAYMENTS ARE MA DE IN EXTREME CIRCUMSTANCES AND ON INSISTENCE OF THE PAYEE IS WIT HOUT ANY SUPPORTING DOCUMENTARY EVIDENCES. NO SUCH INSTANCE HAS BEEN QUOTED BY THE ASSEESEE IN ITS WRITTEN SUBMISSION. IV. THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY INSTANC E OF REFUSAL OF SELLER TO ACCEPT PAYMENT BY CHEQUE. THE LD. ASSESSING OFFICER THEREFORE MADE THE ADDITI ON OF RS. 75,00,000 MAKING DISALLOWANCE U/S. 40A(3) OF THE IN COME-TAX ACT, 1961. 9. AGAINST THIS ADDITION THE ASSESSEE PREFERRED APP EAL BEFORE THE LD. CIT(A). THE LD. CIT(A) PLACED RELIANCE ON THE J UDGEMENT OF HONBLE APEX COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH V. ITO [ 1991]191ITR 667 AND DELETED THE ADDITION. RELEVANT EXTRACT IS REPRODUCED BELOW:- 4.2.9 THUS CONSIDERING THE FACTS AND AFFIDAVITS OF THE SE LLERS IT IS EVIDENTLY CLEAR THE TRANSACTIONS WERE MADE AT A PLA CE WHERE THE SELLER/S DID NOT HAVE A BANK ACCOUNT, THUS, THE CAS E OF ASSESSEE FALLS WITHIN THE EXCEPTION OF CLAUSE (G) (J) (K) OF RULE 6DD OF THE RULES. THEREFORE, ON THE FACTS, THE CASE OF ASSESSE E BEING WITHIN THE PURVIEW OF RULE 6DD (J) OF THE RULES, NO ADDITION U NDER SECTION 40A(3) OF THE ACT WAS JUSTIFIED. THUS, JUDICIOUSLY FOLLOW ING THE ABOVE CITED CASE LAWS, I AM OF THE CONSIDERED OPINI ON THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING PAYMENT MADE TO SE LLERS U/S 40A(3) OF THE IT ACT, WHEN THE CASE OF APPELLANT IN COVERE D UNDER EXCEPTION IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 14 PROVIDED IN RULE 6DD (J) AS HELD IN THE CASE OF ATTAR SINGH GURMUKH SINGH (SUPRA). THUS THE ADDITION MADE BY THE AO U/S 40A(3) AMOUNTING TO RS. 75,00,000/- IS DELETED. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. 10. AGAINST THIS DELETION, THE REVENUE IS IN APPEAL BEFORE US. DURING THE COURSE OF HEARING, THE LD. CIT(DR) RELIE D ON THE FINDINGS OF THE LD. AO AND SUBMITTED THAT IT IS UNCONTROVERT ED FACT THAT THE PAYMENT FOR PURCHASE OF LAND WAS MADE IN CASH. FURT HER, THE ASSESSEE, BEING BUILDER AND DEVELOPER, THE PURCHASE OF LAND IS A BUSINESS EXPENDITURE, THEREFORE SECTION 40A(3) OF T HE ACT WAS CLEARLY ATTRACTED. ASSESSEE COULD NOT PROVE THAT TH E CASE OF THE ASSESSEE FALLS UNDER RULE 6DD. THE DISALLOWANCE DON E BY THE LD. ASSESSING OFFICER IS THEREFORE JUSTIFIED. 11. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASS ESSEE AT FIRST CHALLENGED THE ADDITION ON LEGAL GROUND SUBMITTING THAT THE PRESENT PROCEEDINGS ARE NOT REGULAR ASSESSMENT PROCEEDINGS BUT ARE U/S. 153A R/W SECTION 143(3) WHICH IS AN OUTCOME OF THE SEARCH U/S. 132. ON THE DATE WHEN THE SEARCH WAS INITIATED THE POSITION OF REGULAR ASSESSMENT WAS AS UNDER: IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 15 A.Y. RETURN OF INCOME U/S. 139 PB STATUS ON DATE OF SEARCH REMARKS 2008 - 09 27.02.2009 PB 12 - 13 ASSESSMENT U/S. 143(3) COMPLETED DT.16.12.2010 ASSESSMENT ORDER PB 45- 46 2009 - 10 26.12.2009 PB 47 - 49 ASSESSMENT U/S. 143(3) COMPLETED DT. 29.12.2011 ASSESSMENT ORDER PB 69- 70 2010 - 11 01.04.2011 PB 71 - 73 ASSESSMENT U/S. 143(3) DT. 14.03.2013. APPEAL DECIDED BY HONBLE ITAT. ASSESSMENT ORDER PB 99- 107. ITAT ORDER PB 125-145 2011 - 12 30.09.2011 PB 146 NO ASSESSMENT. D UE DATE FOR NOTICE U/S. 143(2) EXPIRED ON 30.09.2012. 2012 - 13 31.03.2013 PB 167 - 169 NO ASSESSMENT. DUE DATE FOR NOTICE U/S. 143(2) EXPIRED ON 30.09.2013. 2013 - 14 12.11.2014 PB 213 RETURN FILED AFTER SEARCH. 2014 - 15 12.11.2014 PB 257 RETURN FILED AFTE R SEARCH. THUS, THE ASSESSMENT FOR A.Y. 2008-09 WAS ALREADY C ONCLUDED ASSESSMENT AND THEREFORE, IT WAS A NON-ABATED ASSES SMENT. HE THEREFORE RELYING ON VARIOUS JUDGMENTS SUBMITTED TH AT THE SCOPE OF THE PROCEEDINGS U/S. 153A WOULD BE LIMITED TO ONLY THOSE INCRIMINATING MATERIAL WHICH WERE FOUND DURING THE COURSE OF SEARCH. HE SUBMITTED THAT IN RESPECT OF PRESENT ADD ITION, NO INCRIMINATING DOCUMENT WAS FOUND DURING THE SEARCH. THE TRANSACTION FOR PURCHASE OF LAND WAS DULY RECORDED IN THE BOOKS OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 16 THE ASSESSEE. THUS, THE ADDITION ITSELF WAS WITHOUT ANY BASIS AND LIABLE TO BE DELETED. HE RELIED ON FOLLOWING CASES: I. CIT VS CONTINENTAL WAREHOUSING CORPORATION 58 TAXMANN.COM 78 (BOM.) II. OM SHAKTHY AGENCIES (MADRAS) P LTD. 157 ITD 106 2 (TRIB. CHENNAI) III. PARAG M. SANGHVI 63 TAXMANN.COM 118 (TRIB. MUMBAI) IV. CIT VS KABUL CHAWLA 380 ITR 573 (DEL.) V. CIT VS LATA JAIN (DEL HC) 12. AS REGARDS DISALLOWANCE U/S. 40A(3), LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE CURRENT A.Y., AS SESSEE MADE PAYMENT OF RS. 75,00,000 IN CASH FOR PURCHASE OF 3. 95 ACRES OF AGRICULTURAL LAND FROM THREE PERSONS IN VILLAGE SAL AIYA: A. SMT. AYODHYA PATIDAR B. SMT. RAMKUNWAR PATIDAR C. SMT. KRISHNA PATIDAR THE REASONS FOR PAYMENT IN CASH WAS ALSO MENTIONED AS THEY WERE UNAWARE OF ASSESSEE-COMPANY AND ALSO THERE WAS NO B RANCH OF BANK IN VILLAGE SALAIYA AT THAT TIME. HE RELIED ON RULE 6DD(G) FOR CONTENDING THAT SINCE THE PAYMENT WAS MADE AT A PLA CE WHICH WAS NOT SERVED BY ANY BANK, THEREFORE THE PAYMENT WAS A LLOWABLE. LD. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 17 COUNSEL FOR THE ASSESSEE SUBMITTED THAT AN AFFIDAVI T IN THIS REGARD WAS PLACED AT PB 337-339 TO CONTEND THAT THERE WAS NO BANKING FACILITY IN VILLAGE SALAIYA. HE SUBMITTED THAT THE AFFIDAVITS WERE CONFRONTED TO THE LD ASSESSING OFFICER, WHO DID NOT DENY THE SAME IN THE REMAND PROCEEDINGS. 13. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE EXPENDITURE IS DULY RECORDED IN THE BOOKS OF ACCOUN T. THE LAND PURCHASED WAS DEVELOPED FOR MAKING HOUSING PROJECTS LATER ON. IN THE AFFIDAVIT FILED BY THE SELLERS AT PB 337-339, T HEY HAVE CLEARLY STATED THAT THEY WERE NOT MUCH AWARE OF THE ASSESSE E COMPANY AND THEREFORE THE TRANSACTION WAS DONE IN CASH. THUS, T HE PAYMENT WAS MADE IN CASH, AS THE PARTIES DEMANDED THE PAYMENT I N CASH. HE RELIED ON THE CASE OF GURDAS GARG VS CIT IN TS-5374-HC-2015(P & H) THAT THE CONDITIONS MENTIONED IN RULE 6DD ARE NOT E XHAUSTIVE AND ARE ONLY ILLUSTRATIVE. IN A CASE OF BUSINESS EXPEDI ENCY, THE EXPENDITURE IS ALLOWABLE. HE FURTHER RELIED ON THE JUDGMENT OF TIRUPATI CONSTRUCTION VS DCIT (TRIB. INDORE) COPY O F WHICH WAS PLACED AT PB 373-399. HE THEREFORE CONCLUDED HIS AR GUMENTS BY SUBMITTING THAT IN THE PRESENT CASE, HAVING REGARD TO THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 18 CONSIDERATIONS OF BUSINESS EXPEDIENCY THE PAYMENT IS MADE IN CASH, AS THE SELLERS WERE INSISTING PAYMENT IN CASH . LD. COUNSEL FOR THE ASSESSEE THEREFORE SUBMITTED THAT THE DISALLOWA NCE U/S. 40A(3) IS UNCALLED FOR. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GO NE THROUGH THE ORDERS OF AUTHORITIES BELOW, AND THE EVIDENCES ON RECORD. WE FIND THAT THE LEARNED COUNSEL FOR THE ASSESSEE IS C ORRECT IN CONTENDING THAT THE SCOPE OF THE PRESENT PROCEEDING S SHALL BE LIMITED TO THE EVIDENCES FOUND DURING THE COURSE OF SEARCH. THE CONTENTION OF THE ASSESSEE IS SUPPORTED BY THE CASE OF CIT VS KABUL CHAWLA 380 ITR 573 (DEL.) WHEREBY IT HAS BEEN HELD AS UNDER:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUE D TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE S EARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAV E TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEAR CH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE AS SESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE D ISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 19 IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE O F THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THA T THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATAB LE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEAR CH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEA RCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE A O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 15. IN THE PRESENT CASE, LD. AO HAS NOT BROUGHT ANY EVIDENCE IN REGARD TO ANY INCRIMINATING MATERIAL FOUND DURING T HE COURSE OF SEARCH RELATING TO THE ADDITION IN DISPUTE BEFORE U S. IT IS UNDISPUTED THAT THE TRANSACTION FOR PURCHSE OF LAND WAS DULY R ECORDED IN THE BOOKS OF THE ASSESSEE. THE RETURNS FOR THE CURRENT A.Y. 2008-09 WERE ALREADY FILED; AND THE ASSESSMENT WAS ALSO CON CLUDED ON 16.12.2010. THUS, THE ADDITION COULD HAVE BEEN MADE ONLY IN RESPECT OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 20 SEARCH U/S.132 OF THE ACT.. THE PRESENT ADDITION IS THEREFORE NOT JUSTIFIED. 16. IN ANY CASE, EVEN ON MERITS, CLAUSE (G) OF RULE 6DD READS AS UNDER: (G) WHERE THE PAYMENT IS MADE IN A VILLAGE OR TOW N, WHICH ON THE DATE OF SUCH PAYMENT IS NOT SERVED BY ANY BANK, TO ANY P ERSON WHO ORDINARILY RESIDES, OR IS CARRYING ON ANY BUSINESS, PROFESSION OR VOCATION, IN ANY SUCH VILLAGE OR TOWN; IT HAS BEEN SUBMITTED BY THE ASSESSEE BEFORE THE LD . LOWER AUTHORITIES THAT THE PAYMENT IS MADE IN VILLAGE SIL AIYA, WHICH AT THAT TIME WAS NOT SERVED BY ANY BANK. IN SUPPORT OF HIS CONTENTION AN AFFIDAVIT WAS ALSO FILED, WHICH IS PLACED AT PB 337-339. EVEN IN THE REMAND PROCEEDINGS, THE AFFIDAVITS WERE CONFRON TED TO THE LD. AO, WHO DID NOT DENY THE SAME IN THE REMAND PROCEED INGS. THUS, THE EXPENDITURE WHICH IS COVERED UNDER RULE 6DD(G) IS ALLOWABLE. FURTHER LEARNED COUNSEL HAS SUBMITTED THAT THE EXPE NDITURE IS GENUINE AND IS NOT DOUBTED BY THE DEPARTMENT. HE RE LIED ON GURDAS GARG VS CIT IN TS-5374-HC-2015(P & H) TO CONTEND THAT THE CONDITIONS MENTIONED IN RULE 6DD ARE NOT EXHAUSTIVE AND ARE ON LY ILLUSTRATIVE. IN A CASE OF BUSINESS EXPEDIENCY, THE EXPENDITURE I S ALLOWABLE. HE FURTHER RELIED ON THE JUDGMENT OF INDORE BENCH OF T RIBUNAL IN THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 21 CASE OF TIRUPATI CONSTRUCTION VS DCIT, ITA 522/ IND/ 2014, WHERE VIDE ORDER DATED 14.07.2016, IT WAS HELD AS UNDER: THUS, WE FIND THAT THE ASSESSEE HAS MADE PAYMENT O F PURCHASE UNDER EXCEPTIONAL CIRCUMSTANCES OUT OF BUSINESS EXPEDIENC Y AND ALSO FILED ALL THE RELEVANT DOCUMENTS AND EVIDENCE IN SUPPORT OF T HE SAME BEFORE BOTH THE LOWER AUTHORITIES AND THE LOWER AUTHORITIES HAV E NOT BROUGHT ANY MATERIAL ON RECORD BY VERIFYING THE SAME THAT THEY ARE FALSE, BOGUS OR UNRELIABLE. THEREFORE, IN THE GIVEN CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE IS COVERED BY THE EXCEPTIONS IN THE PR OVISO BELOW SUB- SECTION (3A) TO SECTION 40A(3) AND NO DISALLOWANCE U/S 40A(3) CAN BE MADE IN THE HANDS OF THE ASSESSEE. 17. WE THEREFORE RESPECTFULLY FOLLOWING THE JUDGMEN T IN THE CASE OF GURDAS GARG (SUPRA) AND TIRUPATI CONSTRUCTION (SUPRA) HOLD THAT HAVING REGARD TO BUSINESS EXPEDIENCY, THE PAYMENT I N CASH FOR PURCHASE OF LAND THROUGH REGISTERED DEED WAS ALLOWA BLE. THUS, CONSIDERING THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE EXPENDITURE WAS ALLOWABLE AS LEARNED AO COULD NOT H AVE QUESTIONED THE ALLOWABILITY OF EXPENDITURE WITHOUT ANY INCRIMINATING DOCUMENT IN THE ASSESSMENT U/S. 153A; THE PAYMENT WAS COVERED UNDER RULE 6DD(G); AND THAT THE PAYMENT WAS A GENUINE EXPENDITURE AND WAS MADE UNDER BUSINESS EXP EDIENCY. THE ORDER OF THE LD. CIT(A) IS THEREFORE SUSTAINED ON T HIS ISSUE. THUS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 22 GROUND NO.1 OF REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 IS DISMISSED. 18. NOW WE TAKE UP THE COMMON GROUND 2 OF REVENUES APPEAL FOR A.Y. 2008-09 WHICH DEALS WITH ON-MONEY PAYMENT OF RS. 23,00,000/- 19. THE FACTS RELATING TO THIS ISSUE AS CULLED OUT FROM THE RECORDS ARE THAT DURING THE COURSE OF SEARCH AT THE OFFICE PREMISES OF AG8 VENTURES LTD., LOCATED AT F-11, PLOT NO. 201, SHRIH TI COMPLEX, ZONE- I, M.P. NAGAR, BHOPAL, 21 REGISTRIES WERE FOUND. FU RTHER, 6 SALE DEEDS WERE IMPOUNDED FROM THE OFFICE OF AAKRITI AQU A CITY GRAM- CHHAN 11 TH MILE HOSHANGABAD ROAD, BHOPAL. DURING THE COURSE O F ASSESSMENT, LD. AO EXAMINED THE VARIOUS PARTIES FRO M WHOM THE ASSESEE PURCHASED THE LAND, AND FOUND THAT ON-MONE Y HAS BEEN PAID BY THE ASSESSEE FOR VARIOUS TRANSACTIONS. THE ASSESSEE SUBMITTED THAT NO ON-MONEY HAS BEEN PAID, HOWEVER, LD. AO REJECTED THE SUBMISSION OF THE ASSESSEE HOLDING AS UNDER AT PARA 24.4 PAGE 114 OF HIS ORDER:- (I) THE EXTENSIVE AND ELABORATE ENQUIRIES HAVE PROVE D THAT THE ASSESEEE HAS MADE UNACCOUNTED CASH PAYMENTS FOR THE PURCHASE OF LANDS TO THE SELLERS OVER AND ABOVE THE REGISTE RED SALE CONSIDERATION IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 23 (II) THE STATEMENTS OF SELLERS /FARMERS HAVE BEEN RECO RDED ON OATH IN WHICH MANY OF THEM HAVE STATED THAT THEY HAVE UT ILIZED THE CASH RECEIPTS FROM THE ASSESSEE FOR PURCHASING OTHER LA NDS AND PROPERTIES AND INVESTED IN CONSTRUCTION OF HOUSES, VEHICLES AND MARRIAGES OF FAMILY MEMBERS ETC. (III) THE BANK ACCOUNTS OF THE FARMERS HAVE BEEN ANALY SED , WHICH ARE AWASH WITH CASH DEPOSITS AROUND THE TIME SALE OF LANDS. THEY HAVE EXPLAINED THAT THE CASH DEPOSITS ARE OUT OF ON M ONEY RECEIVED BY THEM FROM THE ASSESSEE. (IV) THE CONTENTS OF THE LEDGER NAMED NEW LAND OF PHA NDA AS SCANNED ABOVE STAND PROVEN AS MOST OF THE PERSO NS NAMED THEREIN HAVE ATTENDED IN COMPLIANCE TO SUMMONS ISSUED BY THIS OFFICE AND HAVE CONFIRMED OF HAVING RECEIVED CASH. (V) THE ASSESSEE HAS BEEN CONFRONTED WITH THE STATE MENTS OF THE SELLERS AND COPIES OF THE SAME HAVE BEEN SUPPLIED TO IT. THE ASSESSEE HAS NOT BEEN ABLE TO REFUTE THE FACTS CONTAINED IN T HESE STATEMENTS. 20. IN RESPECT TO THE INSTANT YEAR, LD. AO FOUND T HAT THE ASSESSEE HAD PURCHASED 1.89 ACRES OF AGRICULTURAL LAND AT VI LLAGE PHANDA, FROM SHRI BHAIRU SINGH. THE REGISTRY FOR SAME WAS D ONE ON 27-08- 2007 FOR RS. 9,50,000/- AND THE PAYMENT WAS MADE TH ROUGH DD NO. 005309. DURING THE ASSESSMENT, LD. ASSESSING OF FICER RECORDED THE STATEMENT OF SHRI PRAKASH S/O. SHRI BHAIRU SING H ON 05-02- 2016 ON BEHALF OF HIS FATHER SHRI BHAIRU SINGH. SHR I PRAKASH ADMITTED THAT HIS FATHER HAD RECEIVED RS. 23,00,000 /- IN CASH FROM THE ASSESSEE AS SALE CONSIDERATION FOR THE ABOVE S AID TRANSACTION. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 24 HE, THEREFORE, DISALLOWED RS. 23,00,000/- AND ADD ED TO THE TOTAL INCOME OF THE ASSESSEE. 21. ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD . CIT(A). LD. CIT(A) DELETED THE ADDITION EXAMING THE FACTS IN TH E LIGHT OF JUDICIAL PRONOUNCEMENTS. 22. NOW, THE REVENUE IS IN APPEAL AGAINST THIS ORDE R. LEARNED DEPARTMENT REPRESENTATIVE SUBMITTED THAT THERE WAS CLEAR-CUT EVIDENCE IN THE FORM OF STATEMENT TO ESTABLISH ON-M ONEY PAYMENT. HE FURTHER SUBMITTED THAT THE EXTENSIVE AND ELABORA TE ENQUIRIES HAVE PROVED THAT THE ASSESEEE HAS MADE UNACCOUNTED CASH PAYMENTS FOR THE PURCHASE OF LANDS TO THE SELLERS, OVER AND ABOVE THE REGISTERED SALE CONSIDERATION. THE STATEMENTS OF SELLERS /FARMERS HAVE BEEN RECORDED ON OATH IN WHICH M ANY OF THEM HAVE STATED THAT THEY HAVE UTILIZED THE CASH RE CEIPTS FROM THE ASSESSEE FOR PURCHASING OTHER LANDS AND PROPERTIE S AND INVESTED IN CONSTRUCTION OF HOUSES, VEHICLES AND MARRIAGES OF FAMILY MEMBERS ETC. HE THEREFORE CONTENDED THAT THE ORDER OF THE LD. AO MAY KINDLY BE RESTORED AND THE ADDITION MAY KINDLY BE CONFIRMED. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 25 23. PER CONTRA THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT DURING THE COURSE OF SEARCH, ALTHOUGH THE PURCHASE DEEDS WERE FOUND, BUT ALL THE LAND PURCHASES WERE DULY RECORDE D IN THE BOOKS. NO EVIDENCE WAS FOUND DURING SEARCH TO SHOW THAT TH ERE IS ANY ON- MONEY PAYMENT BY ASSESSEE-COMPANY. DURING THE CUR RENT YEAR, ASSESSEE PURCHASED 1.89 ACRES OF AGRICULTURAL LAND AT VILLAGE PHANDA FROM ONE BHAIRU SINGH FOR RS. 9,50,000 (BY B ANKING CHANNELS) ON 27.08.2007. DURING ASSESSMENT PROCEEDI NGS ON 05.02.2016 BEHIND THE BACK OF ASSESSEE STATEMENT U/ S.131 OF THE ACT OF PRAKASH S/O. BHAIRU SINGHED WAS RECORDED, W HO STATED THAT BHAIRU SINGH RECEIVED ON-MONEY FOR SALE OF LAND I N CASH, WHICH WAS DEPOSITED IN BANK AT A LATER DATE. THE BANK STA TEMENT, AS CONTENDED WAS NEVER BROUGHT ON RECORD. ASSESSEE REQ UESTED TO THE LD ASSESSING OFFICER TO PROVIDE CROSS-EXAMINATION; BUT SAME WAS NOT PROVIDED THUS DEFYING THE PRINCIPLES OF NATURAL JUS TICE AND IS SUPPORTED IN FAVOR OF ASSESSEE BY THE FOLLOWING DEC ISIONS:- I. KISHINCHAND CHELLARAM 125 ITR 713 (SC) II. P.S. ABDUL MAJEED V. AGRL. ITANDSTO [1994] 209 ITR 821 (KER.) III. CITV. EASTERN COMMERCIAL ENTERPRISES [1994] 210 ITR 103 (CAL.) IV. HIRJI NAGJI AND CO. V. CIT [1976] 105 ITR 286 (ORI. ) IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 26 V. J.K SYNTHETICS LTD. V. ITO [1986] 19 ITD 102 (DELHI ) VI. CIT V. BIJU PATNAIK [1991] 190 ITR 396 (ORI.). IT IS UNKNOWN WHY STATEMENT OF SELLER HIMSELF WAS N OT TAKEN, BUT OF HIS SON WAS TAKEN. SONS STATEMENT WOULD NOT HAVE A NY EVIDENTIARY VALUE IN THE TRANSACTION WHERE HE WAS NOT A PARTY T O THE TRANSACTION. HE CONTENDED THAT THE DISPOSITION OF M AKING ON- MONEY PAYMENT IS MERELY A BALD ALLEGATION WHICH IS NOT CORROBORATED. STATEMENT OF THIRD PERSON, WHICH IS N OT CORROBORATED BY ANY EVIDENCE, HAS NO EVIDENTIARY VALUE AND IN SU PPORT OF THIS CONTENTION ON FOLLOWING DECISIONS:- I. ACT VS PRABHAT OIL MILLS 52 TTJ 533 (AHD); II. CHIRONJILAL STEEL ROLLING MILLS VS CIT 84 ITR 222 ( P&H). III. CBI VS V.C. SHUKLA 1998 SCC 410; IV. ASHWINI KUMAR 39 ITR 183 (DEL.); V. SATNAM SINGH CHHABRA 74 TTJ 976 (LUCK.); VI. ASHADEVI 101 TTJ 332 (AHD.); VII. ACIT VS KAMLA PRASAD SINGH 3 ITR (TRIB.) 533 (PAT.) ; VIII. SHETH AKSHYA PUSHPAVANDAN 130 TTJ 42 (AHD.); IX. BALRAM JAKHAR 98 TTJ 924 (ASR.); X. COMMON CAUSE (SC), FOLLOWING V.C. SHUKLA (SUPRA) 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND G ONE THROUGH THE ORDERS OF THE LD. LOWER AUTHORITIES AND THE EVI DENCES ON RECORD. THROUGH GROUND NO.2, REVENUE HAS CHALLENGED THE FIN DING OF LD.CIT(A) DELETING ADDITION OF RS.23,00,000/-FOR AL LEGED ON-MONEY IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 27 MADE BY THE LD.AO. WE OBSERVE THAT THE REGISTRIES W ERE FOUND DURING THE COURSE OF THE SEARCH. BUT THE TRANSACTIO N VALUE IN THE THE REGISTRY WAS SAME AS THE TRANSACTION VALUE RECO RDED IN THE BOOKS. LIKE IN THE PRESENT YEAR, THE TRANSACTION WI TH SHRI BHAIRU SINGH AS PER THE REGISTRY AT PB 420-429 IS AT RS. 9 ,50,000; AND THE TRANSACTION IN THE BOOKS IS RECORDED AT PB 437 WHIC H IS AT SAME VALUE I.E. RS. 9,50,000. THUS, THERE WAS NO INFIRMI TY IN THE TRANSACTION RECORDED IN THE BOOKS AND THE TRANSACTI ON AS PER THE REGISTRY VALUE. IN OTHER WORDS, NO INCRIMINATING MA TERIAL WAS FOUND DURING THE COURSE OF SEARCH TO SHOW ON-MONEY PAYMEN T. IT WAS SUBSEQUENTLY, DURING THE COURSE OF ASSESSMENT PROC EEDINGS THAT THE STATEMENT OF THE SELLERS WERE RECORDED. IN THE PRESENT CASE, IRONICALLY WHEN THE SELLER SHRI BHAIRU SINGH WAS AV AILABLE, IT IS UNKNOWN WHY THE STATEMENT OF THIRD PERSON, SHRI PRA KASH, WHO WAS THE SON OF SHRI BHAIRU SINGH WAS RECORDED. FURT HER, LD AO MENTIONED IN HIS ORDER THAT THE BANK STATEMENT OF T HE FARMERS WERE BROUGHT ON RECORD TO PROVE THAT THE ON-MONEY WAS DE POSITED BY THEM IN THEIR BANK STATEMENT. THE ASSESSEE HAS SUBM ITTED THAT NO SUCH BANK STATEMENT WAS EVER PRODUCED. EVEN IN THE DEPARTMENTS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 28 PAPER BOOK, NO SUCH BANK STATEMENT HAS BEEN FILED. THE LD COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT DURING ASSESSM ENT, ASSESSEE REQUESTED FOR CROSS-EXAMINATION OF THE PARTIES, WHO ACCEPTED ON- MONEY PAYMENT BY THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE REFERRED TO REPLY FILED BY THE ASSESSEE BEFORE THE LD. ASSESSING OFFICER. HE SPECIFICALLY REFERRED TO PB 2161 WHERE A REQUEST WAS MADE BY THE ASSESSEE FOR GRANTING CROSS-EXAMINATION . NO SUCH CROSS-EXMAINATION WAS GRANTED. RELEVANT PART OF THE ORDER OF LD.CIT(A) DELETING THE ADDITION IS EXTRACTED BELOW :- 4.3.7 IN VIEW OF THE ABOVE, FIRSTLY, THE AO OUGHT TO HAVE GIVEN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT. THE APPELLAN T HAS STRONGLY CONTENDED THAT WHY STATEMENT OF SHRI PRAKASH WAS RE CORDED WHEN ACTUAL SELLER I.E. SHRI BHAIRU SINGH WAS ALIVE. SECONDLY, THE AO SHOULD HAVE BROUGHT EVIDENCES HAVING DIRECT NEXUS WITH THE ALLE GED ON MONEY PAYMENT OF RS. 23,00,000/-. LAST BUT NOT THE LEAST, THE LOO SE PAPERS WERE FOUND IN POSSESSION OF SHRI YASHOVARDHAN JAIN AND NOT FROM A PPELLANT. THUS, KEEPING IN VIEW THE ABOVE DISCUSSION AND JUDICIOUSL Y FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KRISHINCHAND CHELLARAM (SUPER), THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 29 23,00,000/-. THUS, ADDITION MADE BY THE AO AMOUNTIN G TO RS. 23,00,000/- IS DELETED . THEREFORE, APPEAL ON THIS GROUND IS ALLOWED . 25. WE THEREFORE FIND THAT IN ABSENCE OF ANY INCRIM INATING MATERIAL FOUND DURING THE COURSE OF SEARCH, AND FURTHER IN A BSENCE OF ANY DIRECT OR CORROBORATIVE MATERIAL EVEN DURING THE AS SESSMENT, EXCEPT FOR THE STATEMENT OF SON, WHO WAS NOT A PARTY TO TH E TRANSACTION; AND WHOSE STATEMENT HAS NO EVIDENTIARY VALUE FOR TH IS TRANSACTION; AND FURTHER THE FACT THAT CROSS-EXAMINATION WAS NOT GRANTED; THE ADDITION HAS NO LEGS TO STAND. THE LD. CIT(A) WAS J USTIFIED IN DELETING THE ADDITION. NO INTERFERENCE IS THUS CALL ED FOR . THE GROUND NO.2 OF REVENUES APPEAL FOR AY 2008-09 DISMISSED. 26. THE NEXT COMMON GROUND OF APPEAL RELATES TO DED UCTION U/S. 80IB(10); WHEREBY IN GROUND NO. 3 OF A.Y. 2008-09; GROUND NO. 3 OF A.Y. 2009-10; GROUND NO. 10 OF A.Y. 2011-12, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION IN RESPECT OF S ECTION 80IB(10) AMOUNTING TO RS. 1,60,73,981; RS. 3,56,08,183; AND RS. 2,68,13,834 RESPECTIVELY. 27. THE FACTS AS MADE OUT FROM THE ASSESSMENT ORDER ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD ASS ESSING OFFICER IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 30 NOTED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IB(10) IN RESPECT OF THE FOLLOWING TWO PROJECTS:- I. FLAMINGO, AAKRITI ECO CITY, BHOPAL II. AAKRITI HIGH RISE, AAKRITI ECO CITY, BHOPAL. LD. AO DENIED THE DEDUCTION U/S.80IB(10) OF THE ACT MAKING FOLLOWING OBSERVATION IN PARA 29.4 ONWARDS PG. 125 OF HIS ORDER: 29.4 CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED IN THE P RECEDING PARAGRAPHS. THE ASSESSEE HAS STATED THAT IT CANNOT BE TREATED AS A CONTRACTOR. HOWEVER, IN VIEW OF THE FACTS OF THE CA SE MENTIONED ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS FIRST SOLD STRUCTURE AND THEREAFTER ACTED AS A CONTRACTOR FOR CONSTRUCTION WORK OF THE RESIDENTI AL UNIT AFTER ENTERING INTO AN AGREEMENT WITH THE PURCHASER AS MENTIONED I N THE SALE DEED OF THE STRUCTURE. IT HAS BEEN FURTHER NOTICED THAT THE ASSESSEE HAS NOT DERIVED PROFIT FROM DEVELOPING AND BUILDING HOUSING PROJECT BUT ON ACCOUNT OF CONSTRUCTION ACTIVITIES UNDERTAKEN AS A CONTRACTOR AFTER SELLING THE STRUCTURE. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CLAIMED THAT IT HAD ENTERED INTO AN AG REEMENT FOR CONSTRUCTION AND SALE OF RESIDENTIAL UNITS WITH THE CUSTOMERS AND HAS HANDED OVER THE COMPLETE RESIDENTIAL UNIT AFTER COM PLETION OF CONSTRUCTION. IT HAS BEEN ARGUED BY THE ASSESSEE TH AT THIS AMOUNTS TO SALE OF THE RESIDENTIAL UNIT. 29.5 CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE I N VIEW OF THE PROVISIONS OF SECTION 17(1A) OF THE REGISTRATION AC T, 1908 WHICH MAKES IT CLEAR THAT W.E.F. 24.09.2001, IF ANY AGREEMENT FOR TRANSFER OF AN IMMOVABLE PROPERTY FOR CONSIDERATION IS NOT REGISTE RED UNDER THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 31 REGISTRATION ACT, IT SHALL HAVE NO EFFECT FOR THE P URPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. 29.6 IN VIEW OF THE DISCUSSION, IT IS CLEAR THAT TH E ASSESSEE HAS NOT DERIVED PROFIT FROM DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT. HONBLE ITAT, INDORE BENCH, INDORE IN THE CASE OF S KY BUILDERS AND DEVELOPERS VS ITO 1(1), BHOPAL (2011) 14 TAXMANN.CO M 78 HAS DECIDED THAT WHERE THE ASSESSEE HAS SOLD PLOTS RESPECTIVE C USTOMERS BY REGISTERING SALE DEED AND THEREAFTER CONSTRUCTED RE SIDENTIAL HOUSES ON THOSE PLOTS AT AN AGREED PRICE, IT HAD TO BE CONCLU DED THAT THE ASSESSEE HAD MERELY ACTED AS A CONTRACTOR AND NOT A DEVELOPE RS AND THEREFORE, IT IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10 ) OF THE INCOME-TAX ACT, 1961. 29.7 FURTHER THE MEASUREMENT REPORT SCANNED ABOVE H AS ESTABLISHED THAT THE TOTAL BUILT-UP AREA OF THE CONSTRUCTED UNI TS HAS EXCEEDED THE CELLING OF 1500 SQ FT IN CASE OF BOTH THE UNITS SEP ARATELY. THUS, THE ASSESSEE HAS VIOLATED THE MANDATORY STATUTORY CONDI TION FOR ELIGIBILITY TO CLAIM DEDUCTION UNDER SECTION 80IB(10) AS THE TOTAL BUILT-UP AREA OF THE TWO UNITS WHICH ARE PART OF FLAMINGO PROJECT AND ON THE PROFIT OF WHICH DEDUCTION HAS BEEN CLAIMED. 28. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD C IT(A). LD. CIT(A) CONSIDERING THE FACTS AND THE SUBMISSIONS, DELETED THE ADDITION AT PARA 4.4.8 TO 4.4.12 AT PG. 58-63 OF HIS ORDER. REL EVANT FINDING IS EXTRACTED BELOW: 4.4.11 NEVERTHELESS, THE BUILDING PERMISSION AS WELL AS TH E COMPLETED CERTIFICATE WAS GRANTED FOR THE ENTIRE PROJECT AND NOT FOR ANY INDIVIDUAL BUNGALOW FLAT. REGISTRATION OF PLOTS/UNF INISHED UNITS/STRUCTURE IS NOT PERMITTED BY THE SUB-REGISTR AR WHEN THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 32 PERMISSION IS GRANTED FOR THE CONSTRUCTION OF ROW H OUSES/FLATS. THE COMPLETION CERTIFICATE HAS BEEN GRANTED FOR THE PRO JECT AS A WHOLE AND NOT FOR INDIVIDUAL HOUSES/ FLATS. THE SAME STAN DS TESTIMONY TO THE FACT THAT THE APPELLANT HAS CONSTRUCTED ALL THE HOUSES AS A SINGLE PROJECT AND NOT AS A CONTRACTOR. IT MAY ALSO B SEEN THAT THE DEVELOPER/BUILDER HAS HANDED OVER THE COLONY AS A W HOLE TO THE MUNICIPAL CORPORATION AND NOT INDIVIDUAL HOUSES AT DIFFERENT POINTS OF TIME. THE ASSESSING OFFICER HAS NOT BROUGHT ON R ECORD EVEN A SINGLE INSTANCE WHERE THE HOUSE HAD BEEN LATER CONS TRUCTED BY THE CUSTOMER HIMSELF OR BY A DIFFERENT CONTRACTOR OR IS STILL LYING UN- CONSTRUCTED. EACH AND EVERY HOUSE HAS BEEN BUILT BY THE APPELLANT ALONE. THIS BEING THE CASE IT ONLY MEANS THAT THE A PPELLANT IS THE DEVELOPER AND BUILDER OF THE PROJECT AS A WHOLE AND NOT A CONTRACTOR FOR INDIVIDUAL CUSTOMER. THE POSSESSION LETTERS AND THE SALE DEEDS HAVE BEEN EXAMINED BY THE REGISTRIES HAVE BEEN TAKE N PLACE ACCORDINGLY, NO DEFICIENCIES, WHATSOEVER, HAVE BEEN POINTS OUT BY THEM EVER SINCE THE PROJECT HAS BEEN STARTED. IN TH E LIGHT OF THE ABOVE FACTS ON RECORD IT IS CLEAR THAT THE CASE CIT ED BY THE ASSESSING OFFICER (SKY BUILDERS & DEVELOPERS VS ITO, BHOPAL 2 011 14 TAXMAN.COM 78) IS NOT APPLICABLE TO THE ISSUE AT HA ND AS THE FACTS AND CIRCUMSTANCE OF THE TWO CASES ARE ENTIRELY DIFF ERENT. THE SKY BUILDERS CASE BEEN DECIDED ON THE ISSUE OF NON-GRA NTING OF COMPLETION CERTIFICATE WITH IN THE FINANCIAL YEAR W HICH IS NOT THE CASE OF THE APPELLANT. FURTHERMORE, THE SAME BENCH OF ITAT INDORE HAS COME OUT CLEARLY ON THE IDENTICAL ISSUE IN FAVO UR OF THE ASSESSEE IN THE CASE OF M/S VARDHMAN BUILDERS AND DEVELPERS VS ITO IN I.T.A NO. 559/IND/2010 DATED 09/05/2012. 4.4.12 THE FOLLOWING CASES WHEREIN THE HONBLE ITATS HAVE OPINED IN FAVOUR OF THE APPELLANT IN IDENTICAL ISSUES REFERRE D TO THEM: IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 33 A. GREEN ASSOCIATES VS ITO, WD. 5(2) BARODA; I.T.A NO. 882/AHD/2013; B. SATSANG DEVELOPERS I.T.A. NO. 1011, 2498 AND 1221 OF 2012 ORDER DATED 12.11.2013; C. D.C.I.T SMR BUILDERS (P) LTD. (2012) 24 TAXMAN.COM 194 (HYD.); D. ITO. VS. MEGHAL DEVELOPERS I.T.A. NO. 296/AHD/2013; E. M/S NAGMA DEVELOPERS, BARODA VS ITO WD. 2(5) BARODA I.T.A. NO. 2385/AHD./2012; F. NARAYAN REALTY VS. D.C.I.T. IN I.T.A. NO. 2293/AHD./2012 AND 2095/AHD/2013 VIDE ORDER DATED 02.02.2014. THUS IT IS PROVED BEYOND DOUBT THAT THE APPELLANT H AD ACTED AS A BUILDER AND DEVELOPER AND NOT A CONTRACTOR OF THE CUSTOMER, AND THE VIEW HAS BEEN UPHELD BY ALL THE COURTS INCLUDING THE ITAT, I NDORE. HONBLE ITAT, INDORE VIDE ITA NO. 472 & 473/IND/2015 AY 2007-08 & 2010-11 IN THE CASE OF APPELLANT HAS ALLOWED CLAIM OF DEDUCTION U/ S 80IB(10) OF THE IT ACT. THE APPELLANT HAS CARRIED ONLY THE ELIGIBLE BUSINES S DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER AFTER READING FEW LINE OF SALE DEED HAS MIS-INTERPRETED ENTIRE FACTS OF THE CASE. THUS, IN THE LIGHT OF PLETHORA OF JUDGMENTS CITED ABOVE AND DECISION OF HONBLE IT AT, INDORE IN THE CASE OF APPELLANT AND OTHERS, THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE I.T. ACT AND WAS ACTING AS A DEVELO PERS AND BUILDER AND NOT MERE A CONTRACTOR. SIMILAR VIEW HAS ALSO BEEN U P HELD IN THE CASE OF APPELLANT FOR AY 2007-08 & AY 2010-11 BY HONBLE IT AT, INDORE VIDE ITAT NO. 472 & 473/IND/2015 DATED 08.01.2019. THERE FORE, THE DISALLOWANCE MADE BY THE AO AMOUNTING TO RS. 1,60,7 3,981/- IS DELETED . THE APPEAL ON THESE GROUNDS IS ALLOWED. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 34 29. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ASSESSM ENT ORDER AND SUBMITTED THAT THE ASSESSEE IS MERELY A CONTRACTOR. HE RELIED ON THE JUDGMENT OF SKY BUILDERS AND DEVELOPERS VS ITO 1(1), BHOPAL (20 11) 14 TAXMANN.COM 78 AND SUBMITTED THAT SINCE THE REGISTRY WAS DONE ONLY AT STRUCTURE LEVEL AND A SEPARATE AGREEMENT FO R CONSTRUCTION WAS DONE, THE ASSESSEE ACTED MERELY A CONTRACTOR. F URTHER, HE SUBMITTED THAT DURING THE ASSESSMENT MEASUREMENT OF TWO UNITS LOCATED IN THE FLAMINGO PROJECT WAS GOT DONE FROM T HE REGISTERD VALUER SHRI NILESH D. MATHRANI. SCANNED COPY OF THE MEASUREMENT REPORT IS AVAILABLE AT PG. 123 OF THE ASSESSMENT OR DER. FROM THE REPORT IT IS EVIDENTLY CLEAR THAT THE TOTAL BUILT-U P AREA OF THE CONSTRUCTED UNITS HAS EXCEEDED THE CEILING OF 1500 SQ FT IN CASE OF BOTH THE UNITS SEPARATELY. THUS, THE ASSESSEE HAS V IOLATED THE MANDATORY STATUTORY CONDITION FOR ELIGIBILITY TO CL AIM DEDUCTION UNDER SECTION 80IB(10) AS THE TOTAL BUILT-UP AREA O F THE TWO UNITS WHICH ARE PART OF FLAMINGO PROJECT AND ON THE PROFI T OF WHICH DEDUCTION HAS BEEN CLAIMED. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 35 30. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE DEFENDED THE ORDER OF LD. CIT(A) AND CONTENDED THAT THE SAME MAY BE CONFIRMED. HE SUBMITTED THAT THE CLAIM OF DEDUCTION U/S. 80IB( 10) WAS ALREADY A SUBJECT MATTER OF REGULAR ASSESSMENT. HE SUBMITTE D THE FOLLOWING CHART: A.Y. AMOUNT STATUS IN REGULAR ASSESSMENT 2004 - 05 TO 2007- 08 (1) DEDUCTION U/S. 80IB(10) FOUND ALLOWABLE BY HONBLE ITAT. PB 438-447 . SPECIFIC PB 440 PARA 6 . ISSUE OF DEVELOPER VS CONTRACTOR RAISED BY LD AO; BUT LD CIT(A) DECIDED THAT ASSESSEE IS A DEVELOPER. SAID ISSUE NOT CHALLENGED BY DEPARTMENT BEFORE HONBLE ITAT. (2) FURTHER, A.Y. 2007-08 DISPUTED BY DEPARTMENT IN 147 PROCEEDINGS LATER-ON, ON THE ISSUE OF DEVELOPER VS CONTRACTOR. ALLOWED BY HONBLE ITAT IN FAVOUR OF ASSESSEE. PB 125- 145. 2008 - 09 1,60,73,981 ALLOWED IN REGULAR ASSESSMENT U/S. 143(3). PB 45-46/ I . 2009 - 10 2,24,27,273 ALLOWED IN REGULAR ASSESSMENT U/S. 143(3). PB 69-70/ I . 2010 - 11 3,56,08,183 DISPUTED BY DEPARTMENT ON ISSUE OF DEVELOPER VS CONTRACTOR. ALLOWED BY HONBLE ITAT IN FAVOUR OF ASSESSEE. PB 125-145 . 2011 - 12 2,68,13,834 BEFORE SEARCH, TIME LIMIT FOR INITIATING REGULAR ASSESSMENT LAPSED. RETURN ON INCOME FILED ON 30.09.2011 (PB 146) ; TIME LIMIT FOR NOTICE U/S. 143(2) LAPSED ON 30.09.2012. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 36 HE THEREFORE CONTENDED THAT DURING SEARCH, NO INCR IMINATING MATERIAL WAS FOUND, AND THE CLAIM WHICH WAS ALREADY CLAIMED AND ALLOWED IN APPEAL UPTO THE LEVEL OF TRIBUNAL WAS AG AIN AGITATED BY THE DEPARTMENT IN THE PROCEEDINGS U/S. 153A. LD. CO UNSEL FOR THE ASSESSEE CONTENDED THAT SO FAR AS THE ISSUE OF DEVE LOPER VS CONTRACTOR IS CONCERNED THE ISSUE WAS ALREADY DECID ED BY THE HONBLE ITAT IN ITA NO. 472 & 473/ IND/ 2015, VIDE ORDER DATED 08.01.2019. HE FURTHER CONTENDED THAT IT IS A REGUL AR PRACTICE IN CONSTRUCTION INDUSTRY TO DO THE REGISTRY AT THE STR UCTURE LEVEL OR OF THE PLOT AND THEREAFTER DO THE CONSTRUCTION UNDER A N AGREEMENT. THIS IS DONE TO FACILITATE THE BUYER TO AVAIL LOAN FACILITY FROM THE BANKS. HE RELIED ON PARAS HOUSING PVT LTD. 22 ITJ 2 73 (TRIB. INDORE) WHERE IT WAS HELD:- 7. AS PER THE PREVAILING PRACTICE IN THE MARKET NO RMALLY ALL THE PROSPECTIVE BUYERS PURCHASE FLAT/ BUNGALOW, ARE INT ERESTED TO AVAIL HOUSING LOAN FACILITY FROM DIFFERENT FINANCIAL INST ITUTIONS/ BANKS. THE FINANCIAL INSTITUTIONS/ BANK INSIST FOR THE EXECUTI ON OF THE SALE DEED BEFORE COMPLETION OF THE UNITS TO SAFEGUARD THEIR I NTEREST. THESE AGREEMENTS HAVE BEEN EXECUTED BY THE ASSESSEE BEFOR E EXECUTION OF SALE DEED AND IN THE AGREEMENT FOR SALE, THE TOTAL COST OF FLAT IS MENTIONED AND NOWHERE THE BIFURCATION OF THE AMOUNT OF PLOT A ND AMOUNT OF FINISHED WORK HAS BEEN MENTIONED. WE ALSO FOUND THA T BUILDERS ARE ASKING THE BUYERS TO PAY THE TOTAL AMOUNT OF FLAT A T DIFFERENT STAGES IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 37 BASED ON THE PROGRESS OF THE PROJECT. IT IS EVIDENC T FROM THE AGREEMENTS SUBMITTED BEFORE THE ASSESSING OFFICER THAT ENTIRE COST OF FLAT AND OTHER CHARGES WERE DEMANDED FROM THE BUYERS WITHIN A PERI OD OF TWO MONTHS WHICH FURTHER INDICATE THAT THE FLATS WERE ALREADY COMPLETED AND THE POSSESSION WAS HANDED OVER TO THE BUYERS IMMEDIATE LY AFTER RECEIVING THE ENTIRE AMOUNT. THE CONTENTION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS ACTING AS A CONTRACTOR IS MERELY ON THE BASIS OF EXECUTION OF SALE DEED AT A LOWER PRICE THAN THE AGREED PRICE. T HERE IS NO MERIT IN ASSESSING OFFICERS CONTENTION IN SO FAR AS THE BUYE RS HAVING INCURRED ANY EXPENDITURE ON CONSTRUCTION OF SAID FLATS DURIN G THE YEAR UNDER CONSIDERATION AND THE ASSESSEE IS A DEVELOPER AND B UILDER SINCE INCEPTION WHICH HAS NOT ONLY BEEN ACCEPTED BY THE D EPARTMENT BUT ALSO BY THE TRIBUNAL IN ITS ORDER DATED 19.12.2006. HE ALSO REFERRED THE JUDGMENT OF VARDHAMAN BUILDERS AND DEVELOPERS 20 ITJ 277 (TRIB. INDORE) AND MAHENDRA B UILDERS & DEVELOPERS (ITA 371, 372/ IND/ 2012). 31. IN RESPECT OF BUILT UP AREA OF TWO UNITS, LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT BEFORE THE SEARCH, DVO MEAS URED THE BUILT UP AREA OF THE UNITS ON 18.02.2013 AND FOUND THAT ALL THE UNITS HAVE A BUILT-UP ARE LESS THAN 1500 SQ FT AS P RESCRIBED UNDER SECTION 80IB(10). THE REPORT OF THE DVO HAS BEEN PL ACED AT PB 452A-452B. LATER ON, DURING THE SEARCH, VALUATION W AS GOT DONE FROM A PRIVATE VALUER ON 31.01.2014. THIS MEASUREME NT WAS IN IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 38 THE ABSENCE OF ANY AUTHORISED PERSON OF THE ASSESSE E-COMPANY. HE CONTENDED THAT THE REPORT OF THE PRIVATE VALUER IN THE ABSENCE OF ANY AUTHORISED PERSON OF THE ASSESSEE WAS NOT RE LIABLE MOREOVER WHEN THE DVO HAD CLEARLY MENTIONED THAT TH E BUILT-UP AREA IS LESS THAN 1500 SQ FT. LD. COUNSEL FOR THE A SSESSEE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LD. CIT( A) MAY BE CONFIRMED. 32. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GO NE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND THE FACTS A ND EVIDENCES ON RECORD. REVENUE HAS CHALLENGED THE FINDING OF LD.CI T(A) ALLOWING THE CLAIM OF ASSESSEE OF DEDUCTION U/S. 80IB(10) OF THE ACT AT RS. 1,60,73,981; RS. 3,56,08,183; AND RS. 2,68,13,834 RAISING GROUND NO. 3 OF A.Y. 2008-09, GROUND NO. 3 OF A.Y. 2009-10 AND GROUND NO. 10 OF A.Y. 2011-12 REPECTIVELY. AT THE FIRST INSTANCE, WE OBSERVE THAT LEARNED ASS ESSING OFFICE HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL FOUN D DURING THE COURSE OF SEARCH U/S.132 OF THE ACT TO ESTABLISH DI SALLOWANCE OF DEDUCTION U/S. 80IB(10). FURTHER, WE FIND THAT THE CLAIM OF DEDUCTION U/S. 80IB(10) WAS ALREADY A SUBJECT MATTE R OF REGULAR IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 39 ASSESSMENTS IN PRECEDING YEARS.. IN THE A.Y. 2004-0 5 TO 2007-08 THE DEDUCTION WAS IMPUGNED BEFORE THIS TRIBUNAL AND THE SAME WAS DECIDED IN FAVOR OF ASSESSEE AND COPY OF ORDER IS P LACED AT PB 438- 447. FURTHER, IN A.Y. 2007-08, THE ISSUE OF DEDUCTI ON WAS DISALLOWED AGAIN IN PROCEEDINGS U/S. 147. THE MATTE R AGAIN TRAVELLED BEFORE THIS TRIBUNAL AND IN ITA NO. 472 & 473/ IND/ 2015, VIDE ORDER DATED 08.01.2019 DEDUCTION U/S.80IB(10) OF THE ACT WAS ALLOWED. THE ORDER HAS BEEN PLACED IN THE ASSESSEE S PAPER BOOK AT PB 125-145. FURTHER IN A.Y. 2008-09, WHICH IS IMPUG NED BEFORE US, THE ASSESSMENT WAS COMPLETED U/S. 143(3) AND THE CL AIM OF DEDUCTION U/S. 80IB(10) WAS ALLOWED BY THE LD. AO ( THE ASSESSMENT ORDER IS PLACED AT PB 45-46). ALSO, IN A .Y. 2009-10, THE CLAIM WAS ALLOWED IN THE ASSESSMENT U/S. 143(3) BY THE LD. AO. THE ASSESSMENT ORDER IS PLACED AT PB 69-70. IN A.Y. 201 0-11, THE ISSUE OF DEVELOPER AND CONTRACTOR TRAVELLED TO ITAT. THE CLAIM WAS ALLOWED BY THE ITAT, INDORE BENCH, INDORE AND THE ORDER IS PLACED AT PB 125-145. THUS, THE ISSUE AS REGARDS THE DEDUCTION U /S. 80IB(10), SO FAR AS THE ASSESSEE IS CONCERNED, HAS ALREADY BEEN SETTLED IN VARIOUS PROCEEDINGS. THE DEPARTMENT IN THE PROCEEDINGS U/S. 153A IS TRYING IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 40 THE RE-AGITATE THIS ISSUE, WHICH IS NOT PERMISSIBLE . THE RELEVANT FINDING OF THE THIS TRIBUNAL IN ITA 472 & 473/ IND / 2015, ORDER DATED 08.01.2019 SQUARELY APPLICABLE ON THE INSTANT ISSUE IS REPRODUCED BELOW: 5. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED THE MA TERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. OBJECTION OF THE A.O. IS THAT TH E ASSESSEE IS NOT UNDERTAKING DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECTS. THE ASSESSEE IS NOT OWNER OF THE LAND OF WHICH PROJECT IS CLAIMED TO HAVE BEEN UNDERTAKEN. THE SIM ILAR ISSUE WAS BEFORE THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RADHE DEVELOPERS 341 ITR 403, WHEREIN TH E HON'BLE HIGH COURT WAS OF THE VIEW THAT THE OWNERSH IP OF THE LAND IS NOT SINE-QUA-NON FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT. THEREFORE, IN OUR CONSIDERED V IEW, THIS OBJECTION OF THE A.O. IS CONTRARY TO THE JUDICIAL PRONOUNCEMENTS CANNOT BE SUSTAINED. FURTHER, THE A. OS OBJECTION THAT THE ASSESSEE IS MERELY ACTING AS A C ONTRACTOR TO THE CUSTOMER TO WHOM LAND IS INDEPENDENTLY SOLD AND THERE AFTER CONSTRUCTION IS BEING DONE AS PER AGREE MENT. THIS ISSUE WAS EXAMINED BY THE TRIBUNAL IN ORIGINAL PROC EEDINGS, WHEREIN IT HAS BEEN DECIDED IN FAVOUR OF THE ASSESS EE. THERE IS NO CHANGE INTO FACTS AND CIRCUMSTANCES. HE NCE, THIS OBJECTION IS ALSO NOT SUSTAINED AND LASTLY THE A.O. OF THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 41 VIEW THAT WHEN THE PERMISSION FROM THE NAGAR NIGAM IS NOT VALID SINCE SAME HAS BEEN TAKEN BEFORE ACQUIRING TH E LAND, SINCE WE HAVE NOT SUSTAINED THE OBJECTION OF THE A. O. THAT OWNERSHIP OF LAND ON WHICH PROJECT IS CLAIMED TO HA VE BEEN UNDERTAKEN, WE THEREFORE, DO NOT FIND ANY MERIT INT O THIS OBJECTION OF THE A.O. THIS OBJECTION IS ALSO NOT SU STAINABLE. HENCE, SAME IS REJECTED. IN VIEW OF THE ABOVE DISCU SSION, WE DO NOT SEE ANY INFIRMITY IN THE FINDING OF THE LD. CIT(A). SAME IS HEREBY UPHELD. 33. FURTHER, WE FIND THAT THE VALUATION WAS DONE BY PRIVATE VALUER IN THE ABSENCE OF THE ASSESSEE OR ANY AUTHORISED AN D RESPONSIBLE PERSON/ EMPLOYEE OF THE ASSESSEE ON 31.01.2014. IT IS PERTINENT TO NOTE THAT THE DISTRICT VALUATION OFFICER HAD ALREAD Y TAKEN THE MEASUREMENT ON 18.02.2013 AND FOUND THE SAME TO BE IN ORDER. THE REPORT OF THE DVO IS PLACED IN ASSESSEES PAPER BOOK AT PB 452A-452B. IT CANNOT THEREFORE BE SAID MERELY ON TH IS REPORT OF PRIVATE VALUER, IN THE ABSENCE OF THE ASSESSEE AND THAT TOO MEASURING ONLY TWO HOUSES; THAT THE BUILT-UP AREA I S EXCEEDING 1500 SQFTS. MERELY ON SUCH REPORT THE DEDUCTION U/S . 80IB(10) CANNOT BE DISALLOWED. 34. WE THEREFORE CONCLUDE THAT THE ISSUE OF DEDUCTI ON U/S.80IB(10) OF THE ACT, WHICH HAS ALREADY BEEN SET TLED EARLIER BY IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 42 THIS TRIBUNAL FOR VARIOUS PRECEEDING ASSESSMENT YEA RS IN THE CASE OF ASSESSEE; AND THAT NO INCRIMINATING MATERIAL WAS FOUND IN THE CASE OF THE ASSESSEE, CLAIM OF DEDUCTION U/S.80IB(1 0) OF THE ACT CANNOT BE DENIED IN PRESENT PROCEEDINGS U/S. 153A R /W. SECTION 143(3). WE RESPECTFULLY FOLLOWING OUR OWN ORDER IN ITA 472 & 473/ IND/ 2015 ALLOW THE CLAIM OF THE ASSESSEE. THE ORDE R OF THE LD CIT(A) IS HEREBY SUSTAINED AND THE DELETION OF ADDITION F OR A.Y. 2008-09, A.Y. 2009-10, A.Y. 2011-12, AMOUNTING TO RS. 1,60,7 3,981; RS. 3,56,08,183; AND RS. 2,68,13,834 RESPECTIVELY, IS HEREBY CONFIRMED. THE APPEALS OF THE REVENUE ON THIS GROUN D IS THEREFORE DISMISSED. 35. NOW WE PROCEED TO GROUND NO. 4 OF THE REVENUES APPEAL FOR A.Y. 2008-09, RELATING TO DISALLOWANCE U/S. 14A TO THE TUNE OF RS. 1,29,271, AND SIMILAR ISSUE IS RAISED IN GROUND NO. 3 OF A.Y. 2009- 10; GROUND NO. 10 OF A.Y. 2011-12; GROUND NO. 13 OF A.Y. 2012-13; GROUND NO. 14 OF A.Y. 2013-14; GROUND NO. 9 OF A.Y. 2014-15 AMOUNTING TO RS. 25,36,515; RS. 1,19,22,476; RS. 1, 51,98,000; RS. 2,11,43,000; AND RS. 2,09,10,000 RESPECTIVELY . FOR ADJUDICATION IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 43 PURPOSE WE WILL TAKE THE FACTS FOR A.Y.2008-09 AND OUR FINDING SHALL APPLY TO THE GROUNDS RAISED ON THIS COMMON ISSUE. 36. LD. AO DURING THE ASSESSMENT PROCEEDINGS U/S. 153A, HELD THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINES S OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECTS. I T IS SEEN FROM THE BALANCE SHEET OF THE ASSESSEE COMPANY THAT IT H AS SHOWN INVESTMENTS IN EQUITY SHARES/ SHARE APPLICATION OF VARIOUS GROUP COMPANIES SUCH AS 1) KARELI SUGAR MILLS PVT.LTD. 2) MAA BHAGWATI SUGAR MILLS LTD. 3) REWA KRIPA SUGARS PVT LTD. THE INVESTMENT WAS SHOWN AS ADVANCE FOR PURCHASE OF LAND. FURTHER THE GROUP COMPANIES HAD ALLOWED EQUITY SHAR ES SUBSEQUENTLY AGAINST THE ADVANCES MENTIONED AGAINST THEIR NAME. THE DIVIDEND FROM SUCH INVESTMENT IS EXEMPT UNDER S ECTION 10(34/35) OF THE INCOME-TAX ACT, 1961. IN THESE CIR CUMSTANCES, IT WAS HELD THAT SECTION 14A IS CLEARLY ATTRACTED AND EXPENDITURE FOR EARNING EXEMPT INCOME SHALL NOT BE ALLOWABLE. SINCE NO SUCH DISALLOWANCE WAS DONE BY THE ASSESSEE, LD AO PROCEE DED TO MAKE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 44 DISALLOWANCE U/S.14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. 37. AGAINST THIS DISALLOWANCE, ASSESSEE FILED APPEA L BEFORE THE LD CIT(A). THE LD CIT(A) CONSIDERING THE FACTS AND THE SUBMISSIONS AND VARIOUS CASE LAWS, DELETED THE ADDITION AT PAGE 64 OF HIS ORDER, AT PARA 4.5.2 TO 4.5.7 RELYING ON VARIOUS DECISIONS IN CLUDING CIT V/S RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 340 (BOM.) AND , CHEMINVEST LIMITED VS. CIT (2015) 378 ITR 33 (DEL) . 38. THE DEPARTMENT IS IN APPEAL AGAINST THE ORDER O F LD CIT(A). THE LD. CIT(DR) RELIED ON ORDER OF THE LD. ASSESSING OF FICER AND CONTENDED THAT THE DISALLOWANCE U/S. 14A R/W RULE 8 D IS JUSTIFIED. HE CONTENDED THAT SINCE EQUITY SHARES HAVE BEEN ISS UED BY THE SISTER COMPANIES, THE DIVIDEND IS THEREFORE EXEMPT, AND THUS, EXPENDITURE FOR EARNING DIVIDEND INCOME HAS RIGHTLY BEEN DISALLOWED. 39. ON THE OTHER HAND, THE LD COUNSEL FOR THE ASS ESSEE DEFENDED THE ORDER OF THE LD CIT(A). HE CONTENDED THAT IN RE SPECT OF DISALLOWANCE U/S. 14A, NO INCRIMINATING MATERIAL WA S FOUND DURING THE COURSE OF SEARCH. HE FURTHER SUBMITTED THAT IT IS A SETTLED IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 45 PROPOSITION OF LAW THAT IF NO EXEMPT INCOME HAS BEE N EARNED, NO DISALLOWANCE U/S. 14A COULD BE DONE. HE RELIED ON F OLLOWING CASES:- I. RAVI SEEDS AND RESEARCH PVT. LTD VS ACIT IN ITA NOS. 976 AND 978 /IND/2016 AS REPORTED ON [2018] 33 ITJ 416 (TRIB. INDORE) II. CHEMINVEST LTD 61 TAXMANN.COM 118 (DEL.). III. SHIVAM MOTORS P LTD 55 TAXMANN.COM 262 (ALL.); IV. CIT VS CORRTECH ENERGY PVT LTD. 45 TAXMANN.COM 116 (GUJ.); V. CIT VS LAKHANI MARKETING 49 TAXMANN.COM 257 (P & H). VI. ACIT VS M. BASKARAN 152 ITD 844 (ITAT CHENNAI) LD. COUNSEL FOR THE ASSESSEE, FURTHER SUBMITTED THA T THERE WERE SUFFICIENT INTEREST FREE FUNDS AVAILABLE WITH THE A SSESSEE FOR MAKING INVESTMENT IN SHARES AND LOANS TO SISTER CON CERNS. HE SUBMITTED THAT SINCE SUFFICIENT INTEREST FREE FUNDS ARE AVAILABLE, INTEREST FREE FUNDS WERE GIVEN TO SISTER CONCERN AN D HENCE NO DISALLOWANCE U/S. 14A COULD BE DONE. 40. THE LD. COUNSEL FOR THE ASSESSEE THEREFORE SUBM ITTED THAT THE ORDER OF LD CIT(A) BE CONFIRMED. 41. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, AND T HE ORDER OF THE LD LOWER AUTHORITIES, FACTS OF THE CASE AND VARIOUS CASE LAWS POINTED DURING THE COURSE OF THE PROCEEDINGS. COMMON ISSUE RELATING TO DELETION OF DISALLOWANCE U/S.14A OF THE ACT HAS BEE N RAISED BY THE REVENUE FOR VARIOUS ASSESSMENT YEARS AS STATED ABOV E. WE OBSERVE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 46 THAT LEARNED CIT(A) HAS DELETED THE DISALLOWANCE IN THE LIGHT OF THE FACTS OF THE INSTANT CASE PLACING RELIANCE ON DECIS IONS SQUARELY APPLICABLE ON THE INSTANT ISSUE OBSERVING AS FOLLOW S:- 4.5.2 I HAVE CONSIDERED THE FACTS OF THE CASE, EVIDENCES ON RECORDED AND ASSESSMENT ORDER, THE ASSESSING OFFICE R OUT OF TOTAL INTEREST PAID OF RS. 2,01,00,302/- HAS ONLY DISALLO WED RS. 1,29,271/- BEING INVESTMENT MADE IN SISTER CONCERNS AND ALLEGE D THAT INVESTMENT IN SISTER CONCERNS WAS MADE ONLY FOR EARNING EXEMPT ED DIVIDEND INCOME. ON PERUSAL OF BALANCE SHEET OF APPELLANT IT WAS OBSERVED THAT AMOUNT OF RS. 27,98,240/- WAS INVESTED EQUITY SHARE S OF M/S. KARELI SUGAR MILLS PVT. LTD. HOWEVER, APPELLANT HAS INTERE ST FREE FUNDS OF RS. 9,71,59,683/- AS ON 31.03.2008. THUS, THE APPELLANT WAS HAVING SUFFICIENT INTEREST FREE FUNDS OF RS. 9,71,59,683/- , THUS PRESUMPTION HAS TO BE DRAWN THAT INVESTMENT WERE OUT OF INTERES T FREE FOUNDS. ON THE FLIP SIDE, THE ASSESSEE HAS ALSO SUCCESSFULLY P ROVED THAT BORROWED FUNDS WERE USED IN NORMAL TAXABLE INCOME GENERATING ACTIVITY & WERE NOT USED IN MAKING INVESTMENT GIVING RISE TO EXEMPT INCOME. IT HAS BEEN DECIDED BY VARIOUS COURTS THAT IN ABSENCE OF N EXUS BEING ESTABLISHED BY THE ASSESSING OFFICER THAT INTEREST BEARING FUNDS WERE USED ARE MORE THAN THE INVESTMENT MADE TO EARN EXEM PT INCOME, THEN PRESUMPTION WOULD ARISE THAT INVESTMENT WERE MADE O UT OF OWN FUNDS AND NOT OUT OF BORROWED FUNDS,. THUS, THE RE ASONING ADOPTED BY ID. AO IS FALLACIOUS AND NOT IN ACCORDANCE TO ST ATED LAW. RELIANCE PLACED ON THE DECISION OF HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT V/S UTI BANK (2013)32 TAXMAN. COM 370 (GUJ) WHICH LAID DOWN THAT WHERE THE ASSESSEE HAD SUFFICIENT INTEREST FREE FUN DS TO MEET ITS TAX FREE INVESTMENT YIELDING EXEMPT INCOME, IT COULD BE PRESUMED THAT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 47 SUCH INVESTMENTS WERE MADE FROM INTEREST FREE FOUND AND NOT FROM LOAN FUNDS, AND THUS NO DISALLOWANCE UNDER SECTION 14A BEING WARRANTED. FURTHER RELIANCE HAS BEEN PLACED BY THE LD. ARS ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 340 (BOM.) WHEREIN IT WAS HELD THAT:- IF THERE BE INTEREST-FREE FUNDS AVAILABLE TO AN A SSESSEE TO MEET ITS INVESTMENT AND AT THE SAME TIME THE ASSESSEE HAD RA ISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST-FREE FUNDS AVAILABLE. FURTHER RELIANCE HAS BEEN PLACED BY THE LD. ARS ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S HDFC BANK LTD. (2014) 366 ITR 505 (BOM.) WHEREIN IT WAS HELD THAT:- WHERE ASSESSEES CAPITAL, PROFIT RESERVES, SURPLU S AND CURRENT ACCOUNT DEPOSIT WERE HIGHER THAN THE INVESTMENT IN TAX-FREE SECURITIES, IT WOULD HAVE TO BE PRESUMED THAT INVESTMENT MADE B Y THE ASSESSEE WOULD BE OUT OF THE INTEREST-FREE FUNDS AVAILABLE W ITH ASSESSEE AND NO DISALLOWANCE WAS WARRANTED U/S 14A. BESIDES THIS RELIANCE COULD ALSO BE PLACED UPON TH E DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PCIT V/S INDIA GELATINE & CHEMICALS LTD. (2016) 66 TAXMAN.COM 356 (GUJ.) WHEREIN IT HAS BEEN HELD THAT WHERE THE ASSESSEE IS HAVING SUFFICI ENT INTEREST-FREE FUNDS TO COVER THE INVESTMENTS, NO PORTION OF THE I NTEREST EXPENDITURE CAN BE DISALLOWED U/S. 14A R.W.R. 8D. SIMILAR RATIO HAVE BEEN PROPOUNDED IN THE DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASES OF CIT V/S TORRENT POWER LTD. (2014) 363 ITR 474 (GUJ. ) AND CIT V/S HITACHI HOME & LIFE SOLUTIONS (I) LTD. (201 4) 221 TAXMAN 109 (GUJ.) AND JURISDICTIONAL HIGH COURT IN THE CASE OF JCIT V/S BEEKAY ENGINEERING CORPORATION 38 DTR 289 (CHHATTISGARH). APPLYING THE RATIO LAID DOWN BY ABOVE-CITED CASE LA W IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 48 TO THE FACTS OF THIS CASE, I REACH TO THE CONCLUSIO N THAT THE ASSESSEE HAVING MORE TAX-FREE FUNDS THAN THE AMOUNT OF INVES TMENTS CAPABLE OF EARNING EXEMPT INCOME, PRESUMPTION NEEDS TO BE DR AWN IN FAVOUR OF THE ASSESSEE THAT INTEREST FREE FUNDS WERE USED FOR INVESTMENT CAPABLE OF EARNING EXEMPT INCOME NOT OTHER WAY ROUN DED MADE U/S 14A OF THE ACT WAS NOT JUSTIFIED ON FACTS AND IN LA W ON THIS COUNT. 4.5.3 ANOTHER FACET OF CONTENTION PUT FORTH BY THE LD. AR IS THAT THE APPELLANT HAS CLAIMED THAT IT HAD NOT INCURRED ANY EXPENDITURE FOR PURPOSE OF EARNING THE ABOVE MENTIONED EXEMPT INCOM ES IN RESPECT OF ASSESSMENT YEARS WHERE EXEMPTED INCOME WAS EARNED. WITH REGARD TO INTEREST PAID ON BORROWED FUNDS, THE APPELLANT H AS PROVIDED THE BREAK-UP OF BORROWED FUNDS MAINLY FROM ICICI BANK, BANK OF INDIA, BANK OF BARODA, HUDCO LTD. & ON UNSECURED LOANS AS APPEARING IN COMPUTATION OF TOTAL INCOME, BALANCE SHEETS ETC. BE SIDES THESE DETAILS, THE APPELLANT HAS STATED THAT THE INVESTMENT IN SHA RES HAS BEEN ONLY FOR CONTROLLING THE BUSINESS OF COMPANY AND WAS WIT HOUT ANY MOTIVE OF EARNING EXEMPT DIVIDEND INCOME. HONBLE APEX COU RT IN THE CASE OF MAXOPP INVESTMENT LTD. V/S. CIT (2018) 91 TAXMANN.C OM 154 HAS HELD THAT:- IF AN EXPENDITURE INCURRED HAS NO CAUSAL CONNECTIO N WITH THE EXEMPTED INCOME, THEN SUCH AS EXPENDITURE WOULD OBV IOUSLY BE TREATED AS NOT RELATED TO THE INCOME THAT IS EXEMPT ED FROM TAX, AND SUCH EXPENDITURE WOULD THEN BE AS BUSINESS EXPENDIT URE. TO PUT, IT DIFFERENTLY, SUCH EXPENDITURE WOULD THEN BE CONSIDE RED AS INCURRED IN RESPECT OF OTHER INCOME WHICH IS TO BE TREATED AS P ART OF THE TOTAL INCOME. 4.5.4 AFTER CAREFULLY ANALYZING THE FACTS OF THE AFORESAI D CASES, I AM OF THE CONSIDERED VIEW THAT THE ISSUE RELATING TO D ISALLOWANCE MADE U/S 14A OF THE I.T. ACT IN RESPECT OF THE AFORESAID APPEALS IS COVERED IN FAVOUR OF THE APPELLANT BY A CATENA OF DECISIONS OF VARIOUS COURTS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 49 WHEREIN IT HAS BEEN HELD THAT IN THE ABSENCE OF EXE MPT INCOME, DISALLOWANCE U/S. 14A COULD NOT BE MADE. THE RELEVA NT CASE LAWS ARE AS UNDER:- A. CIT V/S. WINSOME TEXTILE INDUSTRIES LTD. (2009) 319 ITR 204 (P & H) B. CIT V/S. LARKETING INCL. (2014) 272 CTR 265 (P&H HC ) C. CIT V/S. HERO CYCLES (2009) 323 ITR 518 (P&H HC) D. CIT V/S. M/S. SHIVAM MOTORS (P) LTD. (2014) 89 CCH 59 (ALL.) E. CIT V/S. HOLCIM INDIA PVT. LTD. (2014) 90 CCH 81 (D EL.); F. CIT V/S. CORRTECH ENERGY (P) LTD. (2014) 223 TAXMAN 130 (GUJ.); G. CHEMINVEST LIMITED V/S. CIT (2015) 378 ITR 33 (DEL. ) H. REDINGTON INDIA LTD. V/S ADDL. CIT (2016) 97 CCH 21 9 (MAD.) I. PCIT V/S. IL & FS ENERGY DEVELOPMENTS CO. LTD. (201 7) 84 TAXMAN.COM 186(DEL.) 4.5.5 REFERENCE MAY BE MADE TO THE DECISION OF HONBLE GU JARAT HIGH COURT IN CASE OF CIT VS. CORRTECH ENERGY (P) LTD. (SUPRA) AND ALSO TO THE DECISION OF HONBLE PUNJAB & HARYANA HIGH CO URT IN THE CASE OF CIT V/S WINSOME TEXTILE INDUSTRIES LTD. (SUPRA.). IN THE ABOVE DECISIONS, IT HAS BEEN HELD THAT WHERE ASSESSEE DID NOT MAKE ANY CLAIM FOR EXEMPTION OF INCOME, PROVISION OF SECTION 14A COULD HAVE NO APPLICATION. IT IS AN UNDISPUTED FACT THAT THE APPE LLANT HAS NEITHER CLAIMED ANY EXEMPT INCOME NOR HAS CLAIMED DEDUCTION FOR ANY EXPENDITURE IN RELATION TO EXEMPT INCOME NOR HAS CL AIMED DEDUCTION FOR ANY EXPENDITURE IN RELATION TO EXEMPT INCOME. T HE ISSUE IS ALSO COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V/S. SHIVAM MOTORS PVT. LTD. (SUPRA) AND CHEMINVEST LTD. VS. CIT (SUPRA) SUPPORTING THE SAME RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT. IN A DECISION RENDERED BY THE H ONBLE MADRAS HIGH COURT IN THE CASE OF REDINGTON INDIA LTD. V/S. ADDL. CIT (SUPRA), IT WAS HELD THAT CIRCULAR NO. 5/2014 DTD. 11.02.2014 DOES NOT LAY DOWN THE CORRECT LAW. THE PROVISIONS O F SECTION 14A IS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 50 CLEARLY RELATABLE TO THE EARNING OF ACTUAL INCOME A ND NOT NOTIONAL OR ANTICIPATED INCOME. THE COMPUTATION OF TOTAL INCOME IN TERMS OF SEC.5 OF THE ACT. IS ON REAL INCOME AND THERE IS NO SANCT ION IN LAW FOR THE ASSESSMENT OR ADMITTEDLY NOTIONAL INCOME, PARTICULA RLY IN THE CONTEXT OF EFFECTING A DISALLOWANCE IN CONNECTION THEREWITH . THUS, ACCEPTING THE SUBMISSION OF THE REVENUE THAT S. 14A WOULD BE ATTRACTED EVEN TO EXEMPT INCOME INCLUDABLE IN TOTAL INCOME WOULD RE SULT IN IMPOSITION OF AN ARTIFICIAL METHOD OF COMPUTATION ON NATIONAL AND ASSUMED INCOME AND THIS WOULD BE CARRYING THE ARTIFICE TOO FAR. IN A RECENT DECISION RENDERED BY THE HONBLE DELHI HIGH COURT I N THE CASE OF PCIT V/S. IL & FS ENERGY DEVELOPMENT CO. LTD. (SUPRA), THE COURT WAS NOT PERSUADED WITH THE INTERPRETATION PLACED BY THE CIRCULAR NO. 5/2014 DTD. 11.02.2014 AND IT WAS HELD THAT WHAT IS TAXABLE U/S.5 IS THE TOTAL INCOME WHICH IS NEITHER NOTIONAL NOR SPECULATIVE. IT HAS TO BE REAL INCOME EARNED AS CLAIMED BY THE ASSESSEE HAS TO BE IN RELATION TO THE INCOME EARNED IN SUCH PREVIOUS YEA R AND IF THERE IS NO EXEMPT INCOME EARNED IN THE PARTICULAR ASSESSMENT Y EAR THE QUESTION OF DISALLOWANCE OF EXPENDITURE INCURRED TO EARN EXE MPT INCOME IN TERMS OF SECTION 14A AND RULE 8D WOULD NOT ARISE. I N VIEW OF THE ABOVE DISCUSSION, I AGREE WITH THE ARGUMENT OF THE LD. ARS THAT ON THIS LOGIC THAT NO DISALLOWANCE CAN BE MADE U/S 14 A OF THE ACT WHEN NO EXEMPTED INCOME CLAIMED;. ON THIS COUNT, DISALLO WANCE U/S 14A OF THE ACT MADE IN BY THE AO NEEDS TO BE DELETED BEING UNSUSTAINABLE ON FACTS AND IN LAW. 4.5.6 CONTINUING WITH THIS CUE, THE LD. ARS HAVE FURTHER EXTENDED THE SAME AGREEMENT OF NO EXEMPT INCOME LEADING TO NO DISALLOWANCE U/S. 14A OF THE ACT REFERRING TO ANOTHER FACTS OF THE SAME AGREEMENT BY SAYING THAT DISALLOWANCE U/S.14A OF THE ACT CAN BE MADE ONLY TO THE EXTENT OF EXEMPT INCOME EARNED DURING THE YEA R. IN SUPPORT, LD. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 51 ARS HAVE PLACED HEAVY RELIANCE ON THE JUDGMENT OF T HE HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT REPORTED IN (2018) 91 TAXMANN.COM 154 WHEREIN PRINCIPALLY AFFIRMING THE RATIO OF HONBLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF PCIT V/S. STATE BANK OF PATIALA (2017) 391 ITR 218 (P&H) RESTRICTING THE DISALLOWANCE TO THE EXTENT OF EXEMP T INCOME, IT WAS HELD THAT- WE RATE FROM THE FACTS IN THE STATE BANK OF PATIAL A CASES THAT THE AO, WHILE PASSING THE ASSESSMENT ORDER, HAD ALREADY RESTRICTED THE DISALLOWANCE TO THE AMOUNT WHICH WAS CLAIMED AS EXEMPT INCOME BY APPLYING THE FORMULA CONTAINED IN RULE 8D OF THE RULES HOLDING THAT SECTION 14A OF THE ACT WOULD BE APPLICABLETHEREFORE, ON FACTS, THE PUNJAB AND HARY ANA HIGH COURT HAS ARRIVED AT A CORRECT CONCLUSION BY AFFIRM ING THE VIEW OF THE ITAT. RELIANCE IN SUPPORT IS ALSO PLACED UPON THE FOLLOWI NG DECISIONS:- JOINT INVESTMENT LTD. VS. CIT (2015) 372 ITR 694 (D EL.) PCIT V/S. EMPIRE PACKAGE (P.) LTD. (2016) 286 CTR 4 57 (P&H) 4.5.7 SINCE THIS IS UNEQUIVOCALLY CLEAR THAT APPELLANT DI D NOT CLAIM ANY EXEMPT INCOME DURING THE ASSESSMENT YEAR, SO TH E AMOUNT OF DISALLOWANCE HAS TO BE RESTRICTED TO ZERO I.E. IN T HE YEAR NO DISALLOWANCE SHOULD HAVE BEEN MADE. I FIND CONSIDER ABLE FORCE IN THE ARGUMENTS OF THE LD. AR IN THIS REGARD. RESPECTFULL Y FOLLOWING THE BINDING PRECEDENTS, I AM OF THE CONSIDERED OPINION THAT THE DISALLOWANCE MADE TO THE TUNE OF RS. 1,29,271/- BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT IS NOT TENABLE ON THE RATIO LAID DOWN BY CASE LAWS CITED SUPRA. 14A OF THE ACT IS NO T TENABLE ON THE RATIO LAID DOWN BY CASE LAWS CITED SUPRA. ACCORDING LY, THE APPELLANT DESERVES FULL RELIEF IN THIS COUNT ITSELF AND HENCE , THE DISALLOWANCES IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 52 MADE U/S14A AMOUNTING TO RS. 1,29,271/ IS DELETED. THEREFORE, APPEAL ON THIS GROUNDS IS ALLOWED. 42. IT IS ALSO NOT IN DISPUTE THAT DURING SEARCH, N O INCRIMINATING MATERIAL WAS FOUND TO ESTABLISH THAT DISALLOWANCE U /S. 14A OUGHT TO HAVE BEEN MADE AND NO DIVIDEND INCOME WAS EARNED OU T OF THE INVESTMENT MADE IN THE GROUP COMPANIES. 43. WE FURTHER NOTICE THAT THERE WAS SUFFICIENT INT EREST FREE FUNDS AVAILABLE WITH THE ASSESSEE FOR MAKING INVESTMENT I N SHARES OF SISTER CONCERNS. THE FOLLOWING CHART ELABORATES THE SAME: A.Y. INVESTMENT IN SHARES AND LOAN OF SISTER CONCERN AVAILABLE INTEREST FREE FUNDS SHARES LOANS AND ADVANCES (SHARE CAP. + RESERVES+ UNSECURED LOANS) (1) (2) (3) (5) 2008-09 27,98,240 - 11,29,50,195 2009-10 6,82,39,760 1,71,87,000 16,57,71,581 2011-12 23,19,25,600 4,27,15,103 39,02,74,444 2012-13 25,30,75,600 7,40,00,071 49,40,65,000 2013-14 24,45,16,000 8,65,10,734 55,74,89,000 2014-15 24,45,16,000 14,54,74,836 1,16,58,50,000 THE ABOVE CHART CLEARLY DEMONSTRATES THAT SUFFICIEN T INTEREST FREE FUNDS WERE AVAILABLE FOR MAKING INVESTMENT IN SHARE S OF SISTER IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 53 COMPANIES. LD COUNSEL FOR THE ASSESSEE RELIED ON FO LLOWING CASES TO CONTEND THAT DISALLOWANCE U/S. 14A IS NOT CALLED FO R AS SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE: (I) CIT V/S UTI BANK (2013)32 TAXMAN. COM 370 (GUJ) (II) CIT V/S RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 340 (BOM.) (III) CIT V/S HDFC BANK LTD. (2014) 366 ITR 505 (BO M.) (IV) PCIT V/S INDIA GELATINE & CHEMICALS LTD. (2016 ) 66 TAXMAN.COM 356 (GUJ.) 44. IT IS AN ESTABLISHED FACT IN THE INSTANT CASE T HAT NO INTEREST DISALLOWANCE U/S.14A OF THE ACT IS CALLED FOR IN T HE YEARS UNDER DISPUTE BEFORE US AS THE ASSESSEE HAD SUFFICIENT IN TEREST FREE FUNDS IN THE FORM OF SHARE CAPITAL AND ACCUMULATED RESERV E AND SURPLUS TO COVER THE INVESTMENT IN EQUITY SHARES. HOWEVER A S REGARDS THE DISALLOWANCE AS PER LIMB (III) OF RULE 8D OF IT RU LES, WE DIRECT THE ASSESSING OFFICER TO SUSTAIN THE DISALLOWANCE TO TH E EXTENT OF DIVIDEND INCOME EARNED DURING THE YEAR OR 0.5% OF AVERAGE INVESTMENT IN EQUITY SHARES AT THE END OF EACH ASSE SSMENT YEAR IN QUESTION BEFORE US, WHICHEVER IS LESS. RESPECTFULLY FOLLOWING THE VARIOUS JUDGMENTS, WE PARTLY CONFIRM THE ORDER OF L D CIT(A) AS PER TERMS INDICIATED ABOVE. THUS GROUND NO. 4 FOR A.Y. 2008-09, IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 54 GROUND NO. 3 OF A.Y. 2009-10 , GROUND NO. 10 OF A.Y . 2011-12), GROUND NO. 13 OF A.Y. 2012-13 , GROUND NO. 14 OF A. Y. 2013-14 AND GROUND NO. 9 OF A.Y. 2014-15) ARE PARTLY ALLOWE D AS PER TERMS INDICATED HEREINABOVE. 46. NOW WE TAKE UP COMMON GROUND RELATING TO ADDITI ON MADE ON THE BASIS OF LOOSE PAPER LPS A-14 PAGE NO. 38, WHI CH IS GROUND NO. 1 OF DEPARTMENTS APPEAL IN A.Y. 2009-10 (RS. 4,96, 677/-), GROUND NO. 6 FOR A.Y. 2011-12 (RS. 5,96,000/-), GROUND NO. 7 FOR A.Y. 2012-13 (RS. 5,96,000/-), GROUND NO. 9 FOR A.Y. 201 3-14 (RS. 5,96,000/-) AND GROUND NO. 6 FOR A.Y. 2014-15 (RS. 5,96,000/-). 47. THE FACTS IN BRIEF ARE THAT DURING THE COURSE O F SEARCH, A LOOSE PAPER LPS A-14, PAGE NO. 38 WAS FOUND AND SEIZED. T HIS WAS A HANDWRITTEN DOCUMENT, WHEREBY DETAILS OF SALARY, VE HICLE DRIVER ETC WERE WRITTEN IN RESPECT OF SHRI SUNIL SONI, SRI RAJ EEV SONI, SMT. MANJU SONI, SHRI SWAYAM SONI AND MS. ANSHUL SONI. I N THIS SHEET, PARTICULARS OF THIRD ROW WERE WRITTEN UNDER THE HEA D B PART, WHICH CONTENDED CERTAIN AMOUNTS LIKE 5=00, 00=10, 1= 20 ETC, AGAINST THE ABOVE INDIVIDUALS. LD. AO CONCLUDED THAT THESE ARE SALARY AND PERQUISITE PAYMENTS TO THE EMPLOYEES/ DIRECTORS, WH ICH IS NOT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 55 RECORDED IN THE BOOKS. LD AO CONCLUDED THAT AN AMOU NT OF 5=96 HAS BEEN PAID ANNUALLY IN B PART IN THE FORM OF S ALARY 5=00 AND VEHICLE FACILITY (0=96). LD. AO STATED THAT SHRI RAJIV SONI WAS APPOINTED AS DIRECTOR IN AG8 VENTURES LTD. ON 26.06 .2008 AND HE THEREFORE COMPUTED THE UNACCOUNTED SALARY PAYMENT T O SHRI RAJIV SONI FROM THAT DATE ANNUALLY. HE THEREFORE ADDED TH E AMOUNT AS UNDER: A.Y. AMOUNT 2009 - 10 (10 MONTHS I.E. JUNE TO MARCH) 4,96,667 2010 - 11 5,96,000 2011 - 12 5,96,000 2012 - 13 5,96,000 2013 - 14 5,96,000 2014 - 15 5,96,0 00 48. AGAINST THIS ORDER, THE ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION GIVING FINDINGS ON PG. 29 PARA 4.2.2 TO 4.2.6. 49. AGAINST THIS FINDING THE DEPARTMENT IS IN APPEA L. THE LD. CIT(DR) RELIED ON THE ORDER OF ASSESSMENT AND SUBMI TTED THAT THE LD. AO WAS JUSTIFIED IN MAKING THE ADDITION WHICH W AS BASED ON IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 56 NON CORROBORATED LOOSE PAPER. ON THE OTHER HAND, LD . COUNSEL FOR THE ASSESSEE RELIED ON THE FINDING OF THE LD. CIT( A). 50. WE HAVE CONSIDERED THE FACTS OF THE CASE, CONSI DERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS OF THE LOWE R AUTHORITIES. REVENUE IS AGGRIEVED WITH THE FINDING OF LD.CIT(A) DELETING ADDITION MADE BY THE LD.AO ON THE BASIS OF LOOSE PAPERS LPS A-14 ,PAGE 38 FOUND DURING THE COURSE OF SERACH WE OBSERVE THAT A LTHOUGH THE LOOSE PAPER WAS FOUND FROM THE PREMISES OF THE ASSE SSEE-COMPANY, BUT THIS DOCUMENT WAS UNDATED, HANDWRITTEN DOCUMENT . IT WAS UNKNOWN AS TO WHOSE HANDWRITING WAS IT. IT WAS UNKN OWN AS TO FOR WHAT PURPOSE IT WAS MADE. RELEVANT EXTRACT OF THE F INDING OF LD. CIT(A) DELETING THE ADDITION TREATING THE ALLEGED D OCUMENT AS DUMB DOCUMENT NOT CALLING FOR ANY ADDITION READS AS FOLL OWS:- 4.2.5 THIS IS AN UNDISPUTED FACT THAT NEITHER ANY INCRIMI NATING MATERIAL WAS FOUND OR SEIZED DURING SEARCH PROCEEDINGS NOR T HE PAYER HAS EVER ADMITTED ABOUT PAYMENT OF RS. 4,96,677/-. IN ABSENC E OF ANY CORROBORATIVE EVIDENCE TO PROVE THAT THERE WAS ANY EXCHANGE OF MO NEY BY CASH/KIND, AO HAS NO LOCUS TO ASSUME THAT APPELLANT HAS PAID R S. 4,96,677/-. IT IS SETTLED LAW THAT AO CANNOT MAKE ANY ADDITION MERELY ON BASIS OF SUSPICION, HOWEVER STRONG IT MAY BE. THE AO IS NOT JUSTIFIED IN PRESUMING CERTAIN FACTS WITHOUT HAVING ANYTHING TO CORROBORAT E. HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 57 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT CANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HELD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMILAR VIEWS HAVE B EEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (1954) 26 ITR 736 (SC). 4.2.6 IN VIEW OF THE ABOVE DISCUSSION, MATERIAL EVIDENCES ON RECORD AND CASE LAWS CITED, FIRSTLY, THE AO OUGHT TO HAVE EXAM INED OTHER DIRECTORS WHOSE NAMES ARE ALSO WRITTEN ON THE IMPUGNED LOOSE PAPER IN ORDER TO FIND GENUINENESS AND TRUENESS OF THE LOOSE PAPER UNDER C ONSIDERATION. SECONDLY, THE LOOSE PAPER OR RATHER SAY IT AS DUMB DOCUMENT S HOULD BE A SPEAKING ONE HAVING DIRECT NEXUS WITH THE ASSESSEE, WHICH WA S NOT IN THE CASE APPELLANT. LASTLY, THE LOOSE DOCUMENT IS UNDATED AN D UNSIGNED. MY FINDINGS ON THE ISSUE UNDER CONSIDERATION ARE BASED ON THE V ARIOUS CONCLUSIONS DRAWN BY ME WHICH HAVE BEEN DISCUSSED IN THE ABOVE PARAS. THEREFORE, THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 4,96,677/- AS UNACCOUNTED PAYMENT. THUS, THE ADDITION MADE BY THE AO AMOUNTIN G TO RS. 4,96,677/- IS DELETED. THEREFORE APPEAL ON THIS GROUND IN ALLOWED. 51. WE ALSO OBSERVE THAT LD AO FAILED TO CORROBORA TE HIS CONTENTION THAT ANY ADDITIONAL SALARY WAS PAID BY THE ASSESSEE -COMPANY AND THEREFORE FIND NO REASON TO INTERFERE IN THE FINDIN G OF LD CIT(A) THAT THE ALLEGED DOCUMENT IS A DUMB DOCUMENTS. FURTHER, IN NUMEROUS OTHER CASE LAWS COORDINATE BENCHES AND HONBLE COUR TS (AS REFERRED IN THE FINDING OF LD CIT(A) EXTRACTED ABOVE) HAVE C ONSISTENTLY UPHELD IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 58 THE VIEW THAT NO ADDITION COULD BE MADE IN THE HAND S OF THE ASSESSEE ON THE BASIS OF THE DUMB LOOSE PAPERS SEIZ ED DURING SEARCH, IN ABSENCE OF ANY CORROBORATIVE MATERIAL. S OME OF THE CASE LAWS ARE AS UNDER:- I. M M FINANCIERS (P.) LTD. VS. DCIT (2007) 107 TTJ (C HENNAI) 2000 HELD THAT NO ADDITION COULD BE MADE IN THE HANDS O F ASSESSEE ON THE BASIS OF THE DUMB LOOSE SLIPS SEIZED FROM HIS RESID ENCE, IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL TO SHOW PAYMENT OF ANY U NDISCLOSED CONSIDERATION BY THE ASSESSEE TOWARDS PURCHASE OF L AND. II. MONGA METALS (P) LTD. VS. ACIT 67 TTJ 247 (ALL. TRI B) HOLDING THAT REVENUE HAS TO DISCHARGE ITS BURDEN OF PROOF THAT THE FIGURES APPEARING IN THE LOOSE PAPERS FOUNDS FROM A SSESSEES POSSESSION CONSTITUTE UNDISCLOSED INCOME, [IN THE PRESENT CASE , LOOSE PAPERS WERE NOT EVEN SEIZED FROM ASSESSEES POSSESSION]. III. POOJA BHATT VS. ACIT (2007) 73 ITD 205 (MUM. TRIB) HELD THAT WHERE DOCUMENTS SEIZED DURING SEARCH WAS MERELY A ROUGH NOTING AND NOT ANY EVIDENCE FOUND THAT ACTUAL EXPEN DITURES WERE NOT RECORDED IN BOOKS OF ACCOUNT, ADDITIONS NOT JUSTIFI ED. [IN THE INSTANT CASE, SIMILARLY NO OTHER CORROBORATIVE EVIDENCE WAS FOUND IN SEARCH TO PROVE THAT DETAILS/FIGURES MENTIONED ON NOTINGS ON PAGE 1 17 TO 119 TO A/1 REPRESENT ON MONEY PAYMENTS BY THE ASSESSEE]. IV. ATUL KUMAR JAIN VS. DCIT (2000) 64 TTJ (DEL. TRIB) 786- HELD THAT ADDITIONS BASED ON CHIT OF PAPER, SURMISE S, CONJECTURES ETC COULD NOT BE SUSTAINED IN THE ABSENCE OF ANY CORROB ORATIVE EVIDENCE SUPPORTING IT. [SIMILARLY IN PRESENT CASE, NEITHER EITHER PARTIES HAVE ADMITTED PAYMENT/RECEIPT OF ON MONEY NOR ANY CORR OBORATIVE EVIDENCE WAS SEIZED TO SUPPORT THE FINDINGS OF THE AO]. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 59 V. S K GUPTA VS. DCIT (1999) 63 TTJ (DEL TRIB) 532 HELD THAT THAT ADDITIONS MADE ON THE BASIS OF TORN PAPERS AN D LOOSE SHEETS CANNOT BE SUSTAINED AS SAME DO NOT INDICATE THAT ANY TRANS ACTION EVER TOOK PLACE AND DOES NOT CONTAIN ANY INFORMATION IN RELAT ION TO THE NATURE AND PARTY TO THE TRANSACTION IN QUESTION. 52. WE THEREFORE RESPECTFULLY FOLLOWING THE DECISI ONS REFERRED ABOVE AND IN VIEW OF THE FACT THAT THE ALLEGED DOCU MENT IS DUMB IN NATURE AND NO NEXUS IS ESTABLISHED BY THE LD AO FIN D NO REASON TO INTERFERE IN THE FINDING OF LD.CIT(A) WHICH NEEDS T O BE CONFIRMED. ACCORDINGLY GROUND NO. 1 OF DEPARTMENTS APPEAL IN A.Y. 2009-10 (RS. 4,96,677/-), GROUND NO. 6 FOR A.Y. 2011-12 (RS . 5,96,000/-), GROUND NO. 7 FOR A.Y. 2012-13 (RS. 5,96,000/-), GRO UND NO. 9 FOR A.Y. 2013-14 (RS. 5,96,000/-) AND GROUND NO. 6 FOR A.Y. 2014-15 (RS. 5,96,000/-) ARE DISMISSED. 53. NOW WE TAKE UP GROUND NO. 2 OF DEPARTMENTS APP EAL FOR A.Y. 2009-10 WHEREBY THE DEPARTMENT HAS CHALLENGED THE D ELETION OF ADDITION RS. 67,51,000 IN RESPECT OF LPS A-13 RELAT ING TO ON- MONEY IN RESPECT OF 21 REGISTRIES FOUND FROM THE OFFICE ASSESSEE- COMPANY AND 6 REGISTRIES FOUND FROM THE SITE OFFICE OF AAKRITI AQUA CITY. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 60 54. THE FACTS ARE THAT DURING THE CURRENT YEAR, ASS ESSEE PURCHASED FOLLOWING LANDS FROM RESPECTIVE PERSONS: NAME OF FARMERS LAND SITUATED AT AREA SERIAL NO. AND P .NO. OF ASSMT. ORDER DATE OF SALE REGD. SALE CONSIDERATI ON RS. MARKET VALUE RS. ADDITION MADE BY A.O. TOWARDS UNEXPLAINED EXPENDITURE AMT. (RS. REMARKS BY A.O. LATE SHRI LAXMI NARAYAN S/O.SHRI CHAMPALAL PB 614-639 VILL. SALAIYA TOTAL 2.538 HECTRE LAND I.E. 6.268 ACRES S.NO.1 P.NO.99 26.04.2008 12500000 12500000 6,48,000.00 SHRI LAXMI NARAYAN S/O. SHRI CHAMPALAL ATTENDED THE OFFICE ON 05-05-2014 AND STATEMENT RECORDED . IN HIS STATEMENT (SIC- REMARKS OF AO ARE INCOMPLETE) SMT. AYODHYA BAI PATIDAR W/O. SHRI KAILASH NARAYAN 3.SMT. RAMKUWAR W/O. SHRI HARINARYAN PATIDAR 4.SHRI KRISHNA PATIDAR W/O. SHRI THAKUR PRASAD PB 337-372 VILL. SALAIYA TOTAL 1.60 HECT I.E. 3.95 ACRES S.NO.2 P. NO .99 27.12.2008 6700000 10400000 37,00,000.0 SHRI THAKUR PRASAD ATTENDED THE OFFICE ON 26-02-2015AND STATEMENT RECORDED . IN HIS STATEMENT (SIC- REMARKS OF AO ARE INCOMPLETE) SHRI ARJUN S/O. SHRI HARIPRASAD PB 640-656 VILL. CHHAN ,VIKAS KHAND, FANDA DISTT. HUZUR TOTAL 1.75 ACRES S. NO.3 P.NO.1 11 24.04.2008 2625000 3328125 2,00,000.00 SHRI ARJUN S/O SHRI HARIPRASAD ATTENDED THE OFFICE AND STATEMENT RECORDED ON 25-04-2014 SHRI SHYAMNARAYAN S/O.SHRI SWAROOPCHANDRA PB 657-674 VILL. CHHAN PATWARI , VIKAS KHAND, FANDA 1.15 S.NO.5 P.NO.1 11 17-04- 2008 4829000 5541250 21,71,000.00 SHYAMNARAYAN S/O. SHRI SWAROOP CHANDRA R/O. VILL. CHHAN ATTENDED THE OFFICE AND STATEMENT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 61 HECT.IE. TOTAL 2.84 ACRES RECORDED ON 29-04- 2014. 55. LD. AO RELIED ON THE STATEMENTS OF THE PARTIES AND CONTENDED THAT ON-MONEY WAS PAID BY THE ASSESSEE-COMPANY. HE THEREFORE MADE ADDITION IN RESPECT OF ON-MONEY. 56. AGAINST THIS ADDITION, ASSESSEE FILED APPEAL BE FORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION AT PG. 57 P ARA 4.3.5 TO 4.3.10 WHO HAD DELETED THE ADDITIONS AS UNDER: 4.3.5 DUE CONSIDERATION IS GIVEN TO THE SUBMISSION FILED BY THE APPELLANT INTER ALIA THE EVIDENCES FURNISHED. LET ME FIRST SU MMARIES THE BASIS ON WHICH ADDITIONS HAVE BEEN MADE BY THE AO. THE AO HA S SAFELY RELIED UPON STATEMENTS RECORDED EITHER OF SELLER OR OF ANY THIR D PARTY I.E. SHRI THAKUR PRASAD OR HAS MADE ADDITION MADE BY THE AO ARE PURE LY HYPOTHETICAL AND WITHOUT ANY INDEPENDENT CORROBORATIVE EVIDENCE. THE AO ALSO DID NOT PROVIDE OPPORTUNITY OF CROSS EXAMINATION TO THE APP ELLANT. THE AO HAS CONSISTENTLY HARPED ON THE STATEMENTS OF SELLERS/TH IRD PARTY. 4.3.6 THIS IS ADMITTED FACT THAT STATEMENTS OF 21 SELLERS WERE RECORDED. THIS IS ALSO AN ADMITTED FACT THESE STATEMENTS WERE RECORDED BEHIND THE BACK OF APPELLANT. NO OPPORTUNITY OF CROSS-EXAMINAT ION WAS ALLOWED TO THE ASSESSEE THOUGH SPECIFICALLY ASKED FOR BY THE ASSES SEE. IT HAS BEEN HELD BY HONBLE GUJRAT HIGH COURT IN THE CASE OF DCIT V/S M AHENDRA AMBALA PATEL & CIT V/S KANTILALBHAI RAVIDAS PATEL THAT STATEMENT HAS NO EVIDENTIARY VALUE IF OPPORTUNITY OF CROSS-EXAMINATION IS NOT AL LOWED. BESIDES THIS, IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 62 APPARENTLY THE AO DID NOT INDEPENDENTLY VERIFIED TH E FACTS ABOUT THE GENUINENESS OF THE SAID PARTY AS WELL AS THE IMPUNG ED PURCHASED TRANSACTION. IT IS NOT UNDERSTANDABLE AS TO HOW IND EPENDENTLY AND IMPARTIALLY, THE AO COULD REACH TO THE FINAL CONCLU SION THAT ON MONEY AMOUNTING TOTALING TO RS. 67,51,000/- CORRECTLY AS RS. 67,19,000/- WAS PAID FOR PURCHASE OF LAND FROM DIFFERENT SELLERS WITHOUT EVEN BRINGING A SINGLE IOTA OF POSITIVE EVIDENCE ON RECORD. HENCE, THE ADDITION MADE BY THE AO WAS BASED ON MERE GUESS WORK, CONJUCTURES AND SURMISES WHICH HAS NO PLACE IN TAX JURISPRUDENCE. IN SUM & SUBSTANCE, ACTION OF TH E AO IS NEITHER SUSTAINABLE ON FACTS NOR IN LAW, BEING BASED ON THI RD PARTY STATEMENT OR SELLERS. 4.3.7 IT IS A SETTLED LEGAL PRINCIPAL THAT ADDITION CANNO T BE SIMPLY MADE ON THE BASIS OF THIRD PARTY STATEMENT AND WITHOUT GIVI NG ANY OPPORTUNITY OF CROSS EXAMINATION. THE FOLLOWING JUDICIAL PRONOUNCE MENT SUPPORTS THE CASE OF APPELLANT:- CIT V. J.M.D. COMMUNICATIONS P. LTD (2010) 320 ITR 17 (ST) (SC) (ITA NO 106 OF 2007 DT 16-1-2009 (DELHI)(HC). PERSONS WHO WAS ISSUED THE BILLS HAS GIVEN THE STAT EMENTS THAT HE WAS CARRYING ON THE BUSINESS OF ISSUING BOGUS ACCOMMODA TION BILLS ON COMMISSION BASIS WITH THE ASSESSEE, AND THIS WAS NO T PUT TO THE ASSESSEE FOR REBUTTAL OR CROSS-EXAMINATION, HIGH CO URT HELD NO SUBSTANTIAL QUESTION OF LAW. ON SLP BY REVENUE THE COURT HELD THAT IF THE AO WANTS TO USE SOME STATEMENTS MADE BEFORE HIM, TH EN ON REQUEST BY THE ASSESSEE, IS BOUND TO PUT THE DEPONENT FOR CROS S AXAMINATION. KISHINCHAND CHELLARAM V. CIT (1980) 125 ITR 713 (SC ) THOUGH THE PROCEEDINGS UNDER THE INCOME-TAX ACT ARE NOT GOVERNED BY THE STRICT RULES OF EVIDENCE, THE DEPARTMENT IS BOUND T O AFFORD AN OPPORTUNITY TO CONTROVERT AND CROSS EXAMINE THE EVIDENCE ON WHI CH THE DEPARTMENT PLACES ITS RELIANCE. OPPORTUNITY OF CROSS EXAMINATI ON MUST BE GIVEN. THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 63 CONSEQUENCE OF BREACH OF NATURAL JUSTICE IS THAT EI THER THE ADDITION IS VOID OR MATTER MAY HAVE TO BE TO BE REMANDED TO LOWER AU THORITIES. HONBLE DELHI HIGH COURT IN THE CASE OF BASUDEV GAR G VS. COMMISSIONER OF CUSTOMS. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ASH WANI GUPTA, 322 ITR 396 (DEL) HONBLE ITAT, DELHI IN THE CASE OF DCIT VS. HEMINDE R KUMARI IN ITA NO. 4210-4213/DEL/2013 DATE OF ORDER 29.08.2014. HONBLE RAJSTHAN HIGH COURT IN THE CASE OF COMMISSI ONER OF INCOME-TAX- I, JAIPUR VS. A.L. LALPURIA CONSTRUCATION (P) LTD. HONBLE CALCUTTA HIGH COURT IN THE CASE OF COMMISSI ONER OF INCOME TAX VS. EASTERN COMMERCIAL ENTERPRISES (1994) 210 ITR 1 03 (CAL.)(HC) COMMISSIONER OF INCOME TAX VS. SUNRISE TOOLING SYST EM (P) LTD. [2014] 47 TAXMANN 20 (DELHI COURT)- WHERE ASSESSING OFFICER MADE ADDITION TO ASSESSEE S INCOME ON BASIS OF STATEMENT RECORDED BY DIRECTOR OF COMPANY IN COURSE OF SURVEY TO EFFECT THAT SAID AMOUNT REPRESENTED NON-EXISTENT TRANSACTI ON, SINCE STATEMENT SO MADE DID NOT HAVE ANY EVIDENTIARY VALUE AND, MOR EOVER, ASSESSING OFFICER HAD NOT EVEN REJECTED ASSESSEES BOOKS OF ACCOUNT WHILE TREATING TRANSACTION IN QUESTION TO BE BOGUS, IMPUGNED ADDIT ION DESERVED TO BE DELETED HONBLE GUJARAT HIGH COURT IN THE CASE OF PR. COMM. OF INCOME TAX-I VS. CHARTERED SPEED PVT. LTD. AND ALSO HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. INDRAJI SINGH SURI (20 13) 33 TAXMANN 281 (GUJ.) WHERE ADDITIONS WERE MADE ON BASIS OF STATEMENTS O F PERSON WHO WERE NOT ALLOWED TO BE CROSS EXAMINED BY ASSESSEE, ADDIT IONS WERE NOT SUSTAINABLE. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 64 RADHA MADHAV IND. (P) LTD. VS. COMMISSIONER OF CENT RAL EXCISE, RAIPUR (2015) 54 TAXMANN 404 (NEW DELHI CESTAT)- NON-SUPPLY OF DOCUMENTS AND NOT ALLOWING CROSS-EXA MINATION OF SAID WITNESSES WOULD VIOLATE PRINCIPAL OF NATURAL JUSTIC E CIT V. EASTERN COMMERCIAL ENTERPRISES (1994) 210 IT R 103 (CAL.) (HC) THE ASSESSEE IS ENTITLED TO CROSS-EXAMITED THE PER SON WHO WAS EXAMINED BY THE A.O. CROSS- EXAMINATION IS THE SINE QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVANCE INFERENCE CAN BE DRAWN AGAINST A PARTY UNLESS THE PARTY IS PUT ON NOTICE O F THE CASE MADE OUT AGAINST HIM. HE MUST BE SUPPLIED THE CONTENTS OF AL L SUCH EVIDENCE BOTH ORAL AND DOCUMENTARY, SO THAT HE CAN PREPARE TO MEE T THE CASE AGAINST HIM. DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE DCIT VS. MAHENDRA AMBALA PATEL TAX WHEREIN THE HONBLE COURT HELD AS UNDER: THOUGH THE AO HAS PLACED RELIANCE UPON THE STATEME NTS OF SHRI MANOJ VADODARIA AND SHRI G.C. PATEL FOR THE PURPOSE OF TA XING THE AMOUNT IN THE HANDS OF THE ASSESSEE, DESPITE SPECIFIC REQUEST BEI NG MADE BY THE ASSESSEE FOR CROSS-EXAMINING BOTH THE SAID PERSONS, THE AO HAS NOT PERMITTED THE ASSESSEE TO CROSS-EXAMINE THEM. IN TH E CIRCUMSTANCES, NO RELINCE COULD BE PLACED UPON THE STATEMENTS OF THE SAID PERSONS AS THE RESPONDENT ASSESSEE HAD NO OPPORTUNITY TO CROSS-EXA MINE THEM. THE STATEMENTS MADE BY THE AFORESAID PERSONS WOULD HAVE NO EVIDENTIARY VALUE AND AS SUCH, WOULD NOT BE ADMISSIBLE IN EVIDE NCE. DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. KANTIBHAI REVIDAS PATEL TAX WHEREIN IT WAS HELD AS UNDER: IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 65 THE LD. A.O. HAD USED THIS STATEMENT WITHOUT ALLOW ING CROSS EXAMINATION OF VIKAS A. SHAH WHICH IS AGAINST THE P RINCIPAL OF NATURAL JUSTICE. 4.3.8 THE AO FURTHER PRESUMED THAT APPELLANT HAS PAID CON SIDERATION OVER AND ABOVE THE REGISTERED VALUE. HONBLE RAJASTHAN H IGH COURT IN THE CASE OF CIT VS. BHANWARLAL MORWATIYA (2008) 215 CTR 489 (RAJ) HAS HELD AS UNDER:- APART FROM THE FACT, THAT EVEN IF, IT WERE TO BE A SSUMED THAT THE PRICE OF THE LAND WAS DIFFERENT THAN THE ONE RECITED IN THE SALE DEED UNLESS IT IS ESTABLISHED ON RECORD BY THE DEPARTMENT, THAT AS A MATTER OF FACT THE CONSIDERATION AS ALLEGED BY THE DEPARTMENT DID PASS TO THE SELLER FROM THE PURCHASER IT CANNOT BE SAID THAT THE DEPARTMENT HAD ANY RIGHT TO MAKE AN ADDITION. IF THE CASE OF THE APPELLANT STANDS IN A MUCH BETTER FOOTING IN AS MUCH AS THERE IS NO IOTA EVIDENCE FOUND IN COURSE O F SEARCH THAT THE APPELLANT HAD PAID MORE MONEY THAN WHAT WAS STATED IN THE PURCHASE DOCUMENT. IN THE CASE OF THE APPELLANT THE EXERCISE CARRIED OUT BY THE ASSESSING OFFICER IS WITHOUT THE AUTHORITY OF LAW A ND THEREFORE THE SAME CANNOT BE A BASIS FOR ADDITION. HONBLE BOMBAY HIGH COURT IN THE CASE OF MRS. NIRM AL LAXMINARAYAN GROVER V. APPROPRIATE AUTHORITY, 223 ITR 572. THE RELEVANT PORTION OF THE JUDGMENT IS EXTRACTED BELOW: HOWEVER, AS REGARDS THE CONTENTION RAISED ON BEHA LF OF THE PETITIONER THAT THE MARKET RATE FIXED FOR THE AREA IN QUESTION AT T HE RELEVANT TIME IN THE LAND RATES FIXED BY THE NAGPUR MUNICIPAL CORPORATION, NA GPUR, AS WELL AS BY THE STAMP AUTHORITY FOR THE PURPOSES OF LEVY OF STAMP D UTY ON REGISTRATION OF THE DOCUMENTS WAS RS. 1,500 PER SQ. METER, I.E., RS. 14 5 PER SQ. FT. AND THEREFORE, THE RATE OF RS. 225 PER SQ. FT. AGREED T O BETWEEN THE PARTIES FOR PURCHASE OF THE SUIT LAND WAS MORE THAN THE MARKET RATE FOR SUCH LAND, IT MAY BE SEEN THAT THE RATES OF PROPERTIES MAINTAINED BY THE ABOVE AUTHORITY OR OFFICERS FOR THE PURPOSES OF CHECKING EVASION TO STAMP DUTY UPON TRANSFER IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 66 DEEDS ARE NOT PURSUANT TO THE PROVISION IN ANY STAT UTE, RELATING EVEN TO STAMP DUTY. AT ANY RATE IT CANNOT BE A BASIS FOR DE TERMINATION OF THE MARKET VALUE FOR ACQUISITION OR FOR COMPULSORY PURCHASE OF ANY LAND WHERE THE USUAL TEST IS OF A PRUDENT BUYER AND A PRUDENT SELL ER DETERMINED BY THE EVIDENCE OF SALE TRANSACTION, IF AVAILABLE IN THE V ICINITY, OF THE LAND IN QUESTION WHOSE MARKET RATE IS TO BE DETERMINED POSS ESSING THE SAME OR MORE OR LESS SIMILAR ADVANTAGEOUS FEATURES. THIS IS THE VIEW TAKEN BY THE SUPREME COURT IN THE CASE OF JAWAJEE NAGNATHAM V. T HE REVENUE DEVISIONAL OFFICER [1994] 2 JT (SC) 604; AIR 1994 SCW 2852. THE SUBMISSION ON BEHALF OF THE PETITIONERS BASED UPON THE RATES OF PROPERTIES MAINTAINED BY THE STATE GOVERNMENT FOR THE PURPOSES OF CHECKING EVASION OF STAMP DUTY ON TRANSFER DEEDS CANNOT, THEREFORE BE A CCEPTED. 4.3.9 I FIND IT IMPORTANT TO QUOTE DECISION OF HONBLE JU RISDICTIONAL ITAT, INDORE IN THE CASE OF SHRI PARSHWANATH CONSTRUCTION VS ITO IN APPEAL NO ITA/379/IND/2013 DATED 18.07.2014 WHEREIN IT HAS B EEN HELD THAT THE ONLY ADMISSIBLE EVIDENCE REGARDING THE TERMS OF SUC H CONTRACT/AGREEMENT, AVAILABLE BEFORE US, IS THE REGISTERED DEED ITSELF, THEREFORE, THE ORAL EVIDENCE LOSES ITS CREDIBILITY IN VIEW OF SECTION 92 OF INDI AN EVIDENCE ACT. FURTHER HONBLE SUPREME COURT IN THE CASE OF MORARKA PROPAERTIESP LTD. VS BIHARILAL MURARKA & ORS AIR 1978 SC 300 IT HAS BEEN HELD THAT IN THE FACE OF THE DOCUMENTARY EVIDENCE ON RECORD, THE ORA L EVIDENCE IS NOT ENTITLED TO ANY WEIGHT. SIMILAR VIEW WAS ALSO TAKEN IN THE C ASE OF PARAMJEET SINGH VS ITO (2010) 323 ITR 588 (P&H) BY HONBLE PUNJAB AND HARYANA HIGH COURT. 4.3.10 IN VIEW OF THE ABOVE, FIRSTLY, THE AO OUGHT TO HAVE GIVEN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT. SECONDLY, TH E AO SHOULD HAVE BROUGHT EVIDENCE HAVING DIRECT NEXUS WITH THE ALLEGED PAYME NT OF RS. 67,51,000/- (CORRECTLY AS RS. 67,19,000/-). THIRDLY, THE ADDITI ONS MADE BY THE AO ARE ON ASSUMPTION AND PRESUMPTION BASIS. FOURTHLY, THE LOO SE PAPERS WERE FOUND IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 67 IN POSSESSION OF SHRI YASHOVARDHAN JAIN AND NOT FRO M APPELLANT. MY FINDINGS ARE BASED ON THE FINDINGS GIVEN IN ABOVE M ENTIONED PARAS. THUS, KEEPING IN VIEW THE ABOVE DISCUSSION AND JUDICIOUSL Y FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELLARAM (SUPRA) AND DECISION OF HONBLE JURISDICTIONAL ITAT, INDORE I THE CASE OF SHRI PARSHWANATH CONSTRUCTION VS ITO (SUPRA), THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 67,51,000/-. THUS, ADDITION MADE BY THE AO AMOUNTING TO RS. 67,51,000/- IS DELETED. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. 57. AGAINST THIS ORDER OF LD. CIT(A), THE DEPARTMEN T IS IN APPEAL. 58. LD. COUNSEL FOR THE REVENUE HAS RELIED ON THE O RDER OF THE LD. AO. HE CONTENDED THAT IN THE CASE OF SHRI LAXMI NAR AYAN, HE STATED IN HIS STATEMENT THAT ON-MONEY WAS PAID OF RS. 6, 48,000. IN RESPECT OF PURCHASE FROM SMT. AYODHYA PATIDAR, KRIS HNA PATIDAR AND OTHER, HE CONTENDED THAT STATEMENT OF THAKUR PR ASAD PATIDAR, WHO WAS HUSBAND OF SMT. KRISHNA PATIDAR WAS RECORDE D. HE ALSO CONFIRMED THAT THE LAND WAS PURCHASED FOR RS. 85 LA KHS AND ON- MONEY WAS PAID. IN RESPECT OF SHRI ARJUN PATIDAR, H E CONTENDED THAT THE PURCHASE CONSIDERATION WAS BELOW STAMP VALUE, A LTHOUGH ARJUN PATIDAR DENIED ON-MONEY. LASTLY, IN RESPECT OF PURC HASE OF LAND FROM SHRI SHYAM NARAYAN, LD. CIT(DR) STATED THAT HE STATED TO HAVE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 68 RECEIVED ON-MONEY TO THE TUNE OF RS. 21,71,000. HE THEREFORE CONTENDED THAT ADDITION MADE BY LD. AO MAY KINDLY B E RESTORED. 59. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE RELIED ON HIS SUBMISSIONS MADE IN RESPECT TO GROUND NO. 2 FOR A.Y . 2008-09 ABOVE. HE CONTENDED THAT THE REGISTRIES WERE FOUND DURING THE COURSE OF SEARCH. THE TRANSACTION MENTIONED IN THE REGISTRIES WERE DULY RECORDED IN THE BOOKS. ALL PAYMENTS TO THE PAR TIES WERE MADE BY CHEQUE. NO INCRIMINATING MATERIAL TO SHOW ON-MON EY WAS FOUND DURING SEARCH. SUBSEQUENT INQUIRY CONDUCTED BY THE LD AO WAS NOT RELATING TO INCRIMINATING MATERIAL FOUND DURING THE SEARCH. FURTHER, LD. AO DENIED CROSS-EXAMINATION OF THE PARTIES, BEF ORE USING THE STATEMENT AGAINST THE ASSESSEE. FURTHER, IN CASE OF SMT. AYODHYA PATIDAR, IT IS UNKNOWN AS TO WHY STATEMENT OF THE S ELLERS WERE NOT TAKEN, BUT STATEMENT OF SHRI THAKUR PRASAD PATIDAR, WHO WAS HUSBAND OF ONE OF THE SELLERS WAS TAKEN. IN THE CAS E OF SHRI ARJUN PATIDAR, HE ALSO DENIED OF HAVING PAID ON-MONEY. IN THE CASE OF SHRI LAXMI NARAYAN PATIDAR, HIS STATEMENT SEEMS TO HAVE BEEN MADE UNDER SOME CONFUSION. AN AMOUNT OF RS. 6,48,00 0 AS ALLEGED WAS PAID TO HIM, BUT IT WAS PAID IN RESPECT OF ANOT HER LAND 0.106 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 69 ACRES PURCHASED FROM HIM. THIS FACT WOULD BE CLEAR FROM HIS STATEMENT ITSELF, WHERE IN REPLY TO QUESTION 9 AND 10 HE HAS STATED THIS FACT. FURTHER, IT WAS CONTENDED THAT THE LD AO HAS STATED THAT THE BANK ACCOUNTS OF THE SELLERS WERE AVAILABLE, BU T THE SAME WAS NEVER BROUGHT ON RECORD. IN THE DEPARTMENTS PAPER BOOK ALSO, THE SAME WAS NOT MADE AVAILABLE. FURTHER, IT WAS CONTEN DED THAT A STATEMENT OF THIRD PERSON WAS NOT BINDING IN THE CA SE OF ASSESSEE. 60. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E ORDERS OF THE LD. LOWER AUTHORITIES. IT IS AN UNCONTROVERTED FACT THAT THE REGISTRIES WERE FOUND DURING THE COURSE OF SEARCH, BUT IT IS ALSO TRUE THAT THE CONSIDERATION MENTIONED THEREIN WAS ALREAD Y RECORDED IN THE BOOKS. NO EVIDIENCE OF ON-MONEY WAS FOUND DURING THE COURSE OF SEARCH. IN ANY CASE, IT IS A SETTLED LAW THAT BE FORE USING THE STATEMENT OF THIRD PERSON AGAINST THE ASSESSEE, AN OPPORTUNITY OF CROSS-EXAMINATION SHALL BE PROVIDED TO THE ASSESSEE . IN THE PRESENT CASE, NO OPPORTUNITY OF CROSS-EXAMINATION WAS PROVI DED. FURTHER AS HELD IN THE CASE OF CBI VS V.C. SHUKLA 1998 SCC 410 AND CHIRONJILAL STEEL ROLLING MILLS VS CIT 84 ITR 222 (P&H). THE STATEMENT OF THIRD PERSON, WHICH IS NOT CORROBORATED BY ANY EVIDENCE I S NOT BINDING ON IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 70 THE ASSESSEE. THE FACT THAT THE AMOUNT WAS DEPOSITE D IN THE BANK STATEMENT OF THE SELLERS IS UNPROVED BY THE LD AO. IF THE BANK STATEMENTS AS ALLEGED BY THE LD AO WERE THERE, WHY THE SAME WERE NOT BROUGHT ON RECORD; WHY A COPY OF SAME WAS NOT P ROVIDED TO ASSESSEE; OR WHY THE SAME WERE NOT EVEN BROUGHT ON RECORD IN THE DEPARTMENTS PAPER BOOK BEFORE US. WE HAVE GONE THR OUGH THE STATEMENT OF SHRI LAXMI NARAYAN ALSO. IT SEEMS THAT HE GAVE THE STATEMENT ABOUT ON-MONEY IN CONFUSION, AS ANOTHER L AND WAS PURCHASED FOR A CONSIDERATION OF RS. 6,48,000/-, TH E SAME AMOUNT WHICH IS ALLEGED TO HAVE BEEN PAID AS ON-MONEY. FUR THER, IN RESPECT OF SMT. AYODHYA PATIDAR, SMT. KRISHNA PATIDAR AND O THER, IT IS UNKNOWN AS TO WHY STATEMENT OF SELLERS WERE NOT REC ORDED, BUT A STATEMENT OF THIRD PERSON, WHO WAS NOT A PARTY TO T HE TRASACTION WAS RECORDED. INFACT THAKUR PRASAD PATIDAR MADE DIF FERENT STATEMENTS ON DIFFERENT OCCASIONS. IN HIS FIRST STA TEMENT, AT PB 362 IN QUESTION 6 HE STATED THAT HE WAS NOT AWARE OF TH E CONSIDERATION. IN HIS SECOND STATEMENT, HE STATED AT PB 367 QUESTI ON 11 THAT THE CONSIDERATION WAS RS. 67 LAKHS, THUS THERE WAS NO O N-MONEY. IN HIS THIRD STATEMENT, HE STATED THAT THE CONSIDERATION W AS RS. 85 LAKHS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 71 AND THUS THERE WAS ON-MONEY OF RS. 17 LAKHS. SINCE HIS STATEMENTS CHANGED NOW AND THEN HENCE HIS TESDTIMONY DID NOT I NSPITE CONFIDENCE. INTERESTINGLY, LD AO ADDED THE DIFFEREN CE BETWEEN THE TRANSACTION VALUE AND STAMP VALUE I.E. RS. 104 LAKH S LESS RS. 67 LAKHS. FURTHER IN RESPECT OF SHRI ARJUN PATIDAR HE DENIED ON-MONEY. THE ADDITION IS MERELY BASED ON A GUESS WORK OF THE LD AO THAT THE BUYER WOULD HAVE PAID ON-MONEY. 61. CONSIDERING THE ENTIRETY OF THE FACTS AND DETAI LED FINDING OF FACT BY LD.CIT(A) IN LIGHT OF SETTLED JUDICIAL PREC EDENCE, WE FIND NO INFIRMITY IN THE FINDING OF LD.CIT(A) AND THUS ADDI TION MADE BY THE LD.AO CANNOT SUSTAIN. GROUND NO. 2 OF DEPARTMENTS APPEAL FOR A.Y. 2009-10 STANDS DISMISSED. 62. NOW WE DISCUSS THE COMMON GROUND OF THE DEPARTM ENT RELATING TO ADDITION MADE THE ASSESSING OFFICE ON T HE BASIS OF VALUATION REPORT GIVEN BY DEPARTMENTAL VALUATION OF FICER (IN SHORT DVO). THE SAME ISSUE IS TAKEN UP BY THE REVENUE IN GROUND NO. 1 FOR A.Y. 2011-12 (RS. 43,38,292); GROUND NO. 1 FOR A.Y. 2012-13 (RS. 4,18,74,359); GROUND NO. 1 FOR A.Y. 2013-14 (R S. 6,17,61,538) AND GROUND NO. 2 FOR A.Y. 2014-15 (RS. 11,78,40,913 ). IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 72 63. THE FACTS RELATING THE COMMON GROUNDS OF APPEAL ARE THAT DURING THE COURSE OF SEARCH ON 31.01.2014, VALUATIO N OF THE INVESTMENT IN THE PROPERTY WAS GOT DONE FROM THE RE GISTERED VALUER BY THE INVESTIGATION WING. LATER ON, DURING ASSESSM ENT U/S. 153A R/W. SECTION 143(3), REPORT OF DVO WAS ALSO CALLED FOR. BASED ON THE REPORT OF THE DVO DATED 22.03.2016, LD. AO HELD THA T UNDISCLOSED INVESTMENT WAS MADE IN THE CONSTRUCTION OF FOLLOWIN G PROPERTIES AS UNDER: AAKRITI AQUA CITY , VILL. CHHAN , BHOPAL F.YR. A.YR. AS PER ASSESSEE (RS.) AS PER DVO (RS.) ADDITION (RS.) 2011 - 12 2012 - 13 17,86,00,000 20,24,51,877 2,38,5 1,877 2012 - 13 2013 - 14 22,12,00,000 25,09,83,109 2,97,83,109 2013 - 14 2014 - 15 43,88,00,000 50,03,05,682 6,15,05,682 TOTAL 83,86,00,000 95,37,40,668 11,51,40,668 AAKRITI HIGHLANDS , VILL. PHANDA , INDORE ROAD, BHO PAL F.YR. A.YR. AS PER ASSESSEE (RS.) AS PER DVO (RS.) ADDITION (RS.) 2011 - 12 2012 - 13 10,04,00,000 11,01,54,626 97,54,626 2012 - 13 2013 - 14 25,12,00,000 27,53,24,240 2,41,24,240 2013 - 14 2014 - 15 21,85,00,000 23,94,47,186 2,09,47,186 TOTAL 57,01,00,000 62,49,26,052 5,48,26,052 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 73 AAKRITI EXOTICA ,VILL. PHANDA , INDORE BHOPAL ROAD , BHOPAL. F.YR. A.YR. AS PER ASSESSE (RS.) AS PER DVO (RS.) ADDITION (RS.) 2009 - 10 2010 - 11 87,00,000 1,10,08,211 23,08,211 2010 - 11 2011 - 12 1,00,01,000 1,36,03,753 36,02.753 2011 - 12 2012 - 13 1,05,00,000 1,47,60,305 42,60,305 2012 - 13 2013 - 14 1,07,00,000 1,57,00,578 50,00,578 2013 - 14 2014 - 15 1,51,00,000 2,21,56,890 70,56,890 TOTAL 5,50,01,000 7,72,29,737 2,22,28,737 AAKRITI NATURES CURE CENTER , VILL. PHANDA , BHOPA L F.YR. A.Y R. AS PER ASSESSE (RS.) AS PER DVO (RS.) ADDITION (RS.) 2010 - 11 2011 - 12 46,27,000 53,62,539 7,35,539 2011 - 12 2012 - 13 2,64,16,000 3,04,23,551 40,07,551 2012 - 13 2013 - 14 2,39,31,000 2,67,84,611 28,53,611 2013 - 14 2014 - 15 2,87,13,000 3,11,3 2,155 24,18,155 TOTAL 8,36,87,000 9,37,02,856 1,00,14,856 SPROUT (SCHOOL BUILDING), E-8, EXTENTION, BAWADIYA KALAN, BHOPAL F.YR. A.YR. DECLARED BY ASSESSEE ESTIMATED BY DVO PB 751-760 ADDITION BY AO (3) (4) 2013 - 14 2014 - 15 1,05,01,000 3,64,13,0 00 2,59,12,000 64. AGAINST THE ORDER OF THE LD AO, AN APPEAL WAS F ILED BEFORE THE LD CIT(A). LD. CIT(A) DELETED THE ADDITION AT PAGE 74 PARA 4.2.8 TO PARA 4.2.11, HOLDING AS UNDER: IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 74 4.2.8 CONSIDERING THE AFORESAID FACT AND CIRCUMSTANCES OF THE MATTER AND THE LAW AS INTERPRETED BY SEVERAL HIGH COURTS AND T HE HONBLE SUPREME COURT THE FINDINGS ON THIS ISSUE IN RESPECT OF PE CULIAR FACTS OF THIS CASE ARE AS BELOW: A. ADMITTEDLY, THE ASSESSEE COMPANY MAINTAINED ITS REG ULAR BOOKS OF ACCOUNTS SUPPORTED BY BILL/VOUCHERS AND OTHER RECOR DS WHICH WERE SUBJECTED TO AUDIT. THE AO HAS NEITHER POINTED OUT ANY DEFECT IN BOOKS NOR BROUGHT ANY POSITIVE MATERIAL ON RECORD TO ESTABLIS H ALLEGED UNACCOUNTED INVESTMENT IN DIFFERENT PROJECTS OF APPELLANT. MOST IMPORTANTLY, AO HAS NOT EVEN REJECTED THE BOOKS OF ACCOUNTS EVEN AFTER RECE IPT OF VALUATION REPORT. IN VIEW OF THESE FACTS, VALUATION REPORT OBTAINED F ROM DVO CANNOT FROM A FOUNDATION IPSO FACTO FOR MAKING ADDITION TOWARDS A LLEGED SUPPRESSION OF COST OF INVESTMENT. NEITHER DVO NOR AO HAS POINTED OUT THAT CERTAIN EXPENDITURE ON CERTAIN ITEM/CONSTRUCTION WAS INCURR ED WHICH WAS NOT RECORDED IN THE BOOKS MAINTAINED BY THE ASSESSEE. H ENCE, ADDITIONS MADE BY AO IS NOT SUSTAINABLE IN LAW BEING BASED MERELY ON VALUATION REPORT RECEIVED FROM DVO. B. THE AO HAS NOT MENTIONED ANY REASON IN THE ASSESSME NT ORDER OR IN THE REFERENCE TO THE VALUATION, THAT HE HAD ANY INCRIMI NATING MATERIAL WHICH LED TO FROM HIS BELIEF THAT THE APPELLANT HAD UNDER STATED THE COST OF CONSTRUCTION REFERRED FOR VALUATION. IT IS VERY REL EVANT TO UNDERSTAND THAT THE APPELLANT WAS SUBJECT TO SEARCH AND SEIZURE ACT ION U/S 132 OF THE ACT WHICH APPARENTLY DID NOT YIELD TO SEIZURE OF ANY IN CRIMINATING PAPERS/DOCUMENTS SUGGESTING UNACCOUNTED INVESTMENT IN THE DIFFERENT PROJECTS OF APPELLANT. LACK OF ANY INCRIMINATING MA TERIAL/EVIDENCE REGARDING UNDER REPORTING OF COST OF CONSTRUCTION B EING POINTED OUT BY THE A.O., IN SPITE OF SEARCH AND SEIZURE ACTION SIMPLY MADE ON THE BASIS OF DVOS REPORT IS EVEN MORE UNJUSTIFIED AND UNWARRANT ED. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 75 C. DURING ASSESSMENT PROCEEDINGS, APPELLANT RAISED SEV ERAL OBJECTIONS WITH REGARDS TO METHODOLOGY ADOPTED BY DVO AS WELL AS VALUATION ASPECT, BUT AO HAS TOTALLY FAILED TO CONSIDER THE SAME. HE HAS MECHANICALLY ADOPTED THE ESTIMATE OF VALUE OF CONSTRUCTION PROVI DED BY DVO. ONE SHOULD NOT LOSE SIGHT OF THE FACT THAT AT THE END OF THE D AY, COST DERIVED BY DVO IN HIS REPORT IS NOTHING BUT AN ESTIMATE WHICH IS BOU ND OF HAVE AMOUNT OF ESTIMATION, GUESS WORK & OPINION INVOLVED AND ESTIM ATE CANNOT BE EXACT. AFTER ALL IT IS AN ESTIMATE DONE BY AN EXPERT IT IS A POPULAR MAXIM TO ERR IS HUMAN. IT IS EVIDENT FROM THE VERY FACT THAT, APPE LLANT HAS RAISED VARIOUS DISCREPANCIES IN THE DVOS REPORT. HOWEVER, AO DID NOT FIND IT APPROPRIATE TO INVITE COUNTER COMMENTS OF DVO ON OBJECTIONS RAI SED BY THE ASSESSEE. ALTHOUGH, IT IS A SETTLED LEGAL POSITION THAT VALUA TION REPORT SUBMITTED BY DVO IS NOT BINDING UPON AO, BUT IN THE PRESENT CASE AO HAS ADOPTED AND USED THE VALUATION REPORT AS IF IT IS BINDING ON HI M. APPELLANT HAS POINTED OUT SEVERAL GLARING MISTAKES AND OMISSIONS IN VALUA TION REPORT, ON WHICH AO HAS MAINTAINED A CONSPICUOUS SILENCE WHICH IS UN BECOMING OF A QUASI- JUDICIAL AUTHORITY. D. IT IS IMPORTANT TO NOTE THAT DVO HAS PREPARED HIS R EPORT BASED ON DPAR- 2007 AFTER APPLYING COST INDEX ON ABOVE DPAR AS BAS E 100. INTERESTINGLY, DVO HAS APPLIES SAME RATE FOR COST OF CONSTRUCTION OF THE PROJECT EVEN THOUGH THE INVESTMENT IS SPREAD OVER MANY YEARS. AS PER APPELLANT, DVO SHOULD HAVE ADOPTED MPPWD RATES AFTER MAKING CERTAI N ADJUSTMENT FOR THE CONSTRUCTION DONE BY THE ASSESSEE IN DIFFERENT ASSE SSMENT YEARS. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V/S RAJ KUMAR 182 ITR 436 (ALL) HAS HELD THAT VALUE OF PROPERTY UNDER PWD RATES IS MUCH LOWER THAN THE COST OF VALUE OF PROPERTY AS PER CPWD RATES. SI MILARLY, IN THE CASE OF CIT V/S PREM KUMARA MURDIYA 296 ITR 508 (RAJ) WHEREIN HONBLE COURT REFUSED TO INTERFERE IN THE ORDER OF ITAT HOL DING DIFFERENCE BETWEEN CPWD RATED AT 20-25%. SIMILAR VIEWS HAVE BEEN EXPRE SSED IN THE CASE OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 76 ITO V//S NILESH MAHESHWARI (2011) 53 DTR 43 (ITAT) JAIPUR). IN VIEW OF THIS, A DIFFERENCE OF 20-25% BETWEEN COST SHOWN IN BOOKS AND ESTIMATED BY DVO FALLS WITHIN TOLERANCE BAND AS HELD BY VAR IOUS COURTS. FURTHER, APPELLANT PURCHASE MATERIAL ON WHOLESALE BASIS WHIC H BRING ECONOMY OF SCALE INTO CONSTRUCTION COST WHICH AS PER APPELLAN T WOULD RESULT INTO SAVING UPTO 25-30%. AO HAS ACKNOWLEDGED THIS ASPECT BUT DID NOT PROVIDE ANY RELIEF WHILE MAKING ADDITION. APPELLANT HAS ALS O ARGUMENT ABOUT SAVING IN COST OF CONSTRUCTION FOR OTHER REASONS AS WELL I.E. SELF-SUPERVISION, CONSULTANCY ETC. HOWEVER, AO FAILED TO ALLOW ANY BE NEFIT TO THE ASSESSEE ON ANY OF THE COUNT WHICH IS NOT JUSTIFIED. E. I AM OF THE VIEW THAT AS A CONSEQUENCE OF SUCH UNDE R REPORTING, THE AO IS REQUIRED TO REJECT THE BOOKS OF ACCOUNTS BEFO RE MAKING A APPELLANT THE AO HAS NEITHER REJECTED THE BOOKS OF ACCOUNTS B EFORE MAKING A REFERENCE TO DVO FOR VALUATION OF PROPERTY NOR HE D ID AFTER RECEIPT OF VALUATION REPORT FROM DVO. APART FROM THE CASE LAWS REFERRED IN PARA 5.8 OF THIS ORDER, IT IS PERTINENT TO REFER TO THE DECISIO N OF ITO V/S DREAMLAND ENTERPRISES 80 TAXMAN 143 (ITAT ABD) WHEREIN IT WAS HELD THAT WHEN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE W AS SUPPORTED BY REGULAR BOOKS OF ACCOUNTS AND VOUCHERS, CORRECTNESS OF WHICH WAS NOT DISTURBED BY THE AO OR DVO BY BRINGING ANY SPECIFIE D MATERIAL ON RECORD, THE CIT(A) WAS FULLY JUSTIFIED IN HOLDING THAT ON A DDITION COULD BE VALIDLY MADE ON ACCOUNT OF ANY UNDERSTATEMENT OF COST OF CO NSTRUCTION MERELY BECAUSE OF DIFFERENCE AS UNDERSTATEMENT OF COST OF CONSTRUCTION MERELY BECAUSE OF DIFFERENCE AS ESTIMATED BY THE DVO. HENC E, ON THIS COUNT, I AM OF THE VIEW THAT ADDITION MADE MERELY ON THE BASIS OF DVOS REPORT IS NOT SUSTAINABLE. F. THE VALUATION REPORT OF DVO IS NOT BINDING ON THE A O BECAUSE IT IS MERELY AN OPINION OF AN EXPERT. IN THE CONTEXT OF THE CONT ROVERSY IN ISSUE, IT MAY ALSO BE GERMANE TO NOTICE THE EXPRESSION USED BY LE GISLATURE I.E. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 77 ESTIMATE. THUS, RESORT CAN BE MADE TO THE SAID PR OVISION BY THE AO FOR THE PURPOSE OF ESTIMATING THE VALUE OF ANY INVEST MENT, BULLION, JEWELLERY OR ANY VALUABLE ARTICLE ETC. HOWEVER, THIS IS SETTL ED LEGAL POSITION THAT ADDITION CANNOT BE MADE SOLELY ON THE BASIS OF VALU ATION REPORT WHICH IS ONLY GIVE AN ESTIMATE AS HELD BY VARIOUS HIGH COURT , DISCUSSED EARLIER. G. IT IS APPARENT FROM RECORD THAT ASSESSING OFFICER H AS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT THE ASSESSEE H AD MADE ANY UNACCOUNTED INVESTMENT IN CONSTRUCTION OF THE BUILD ING IN QUESTION AND THAT BOOKS OF ACCOUNTS DO NOT REFLECT THE CORRECT C OST OF CONSTRUCTION. IT IS EVIDENT THAT ONLY REASON FOR MAKING THE ADDITION U/ S 69B OF THE ACT IS THAT THERE IS A DIFFERENCE IN THE COST OF CONSTRUCTION A S ESTIMATED BY THE VALUATION OFFICER AND AS SHOWN BY THE ASSESSEE IN I TS BOOKS OF ACCOUNTS. H. THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT C ONSTRUCTION ACCOUNT WAS NOT PRODUCED BEFORE HIM FOR VERIFICATION WHICH IS CONTRARY TO HIS STATEMENT IN PARA 2 OF THE ASSESSMENT ORDER WHEREIN HE HAS MENTIONED THAT BOOKS OF ACCOUNTS WERE PRODUCED AND VERIFIED B Y HIM. HOWEVER DURING THE APPEAL PROCEEDINGS THE ASSESSEE WAS DIRE CTED TO FURNISH THE COPY OF CONSTRUCTION ACCOUNT AND SUPPORTING VOUCHER S FOR VERIFICATION WHICH WAS DULY COMPLIED BY THE ASSESSEE. 4.2.9 IT IS INTERESTING TO NOTE THAT VALUATION OF THE PRO PERTY UNDER CONSIDERATION WAS DONE BY THE DVO AFTER APPLYING CO ST INDEX ON THE BASIS OF DPAR-2007 (AS BASE).IT IS SETTLED LAW THAT DPAR RAT ES ADOPTED BY DVO ARE HIGHER THAN PWD RATES. HONBLE HIGH COURT OF RAJAST HAN IN THE CASE OF CIT V/S PREM KUMARI MURDIYA 296 ITR 344 (RAJ) REFUSED TO INTERFERE IN THE ORDER OF ITAT HOLDING THAT APPROPRIATE RATE TO BE T AKEN INTO CONSIDERATION WOULD BE PWD RATES AND HOLDING DIFFERENCE BETWEEN C PWD RATE AND PWD RATES AT 20-25%. SIMILARLY, IN THE CASE OF ITO V/S NILESH MAHESHWARI (2011) 53 DTR 43 (ITAT) JAIPUR) HELD AFTER RELYING ON THE DECISION OF TEK IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 78 CHAND V/S ITO 51 TTJ (JPR) 607 THAT THERE IS VARIATION IN LOCAL PWD RATES AND CPWD RATE BY MARGIN OF 20-25%. IT HAS BEEN HELD IN THE CASE OF CIT V/S LAHSA CONSTRUCTION (P) LTD. (2013) 357 ITR 671 (DEL HI) THAT NO ADDITION CAN BE MADE SOLELY ON THE BASIS OF VALUATION REPOST OF DVO. LD AR ALSO PLACED RELIANCE ON THE DECISION OF CIT V/S VS PRATAP SINGH AMRO SINGH (1993) 200 ITR 788 (RAJ) THAT ADDITION TO INCOME COULD NOT BE MADE ON THE BASIS OF THE REPOST OF THE VALUATION OFFICER. 4.2.10 AS FAR AS CASE LAWS RELIES UPON BY THE A.O. ARE CON CERNED, ON PERUSAL IT IS SEEN THAT NONE OF THE CASE LAWS RELIE D UPON BY THE AO ARE APPLICABLE TO THE FACTS OF THIS CASE. THE CASE LAWS REFERRED BY AO ARE AS UNDER:- A. CIT V OMPRAKASH BAGARIA (HUF) 287 ITR 523 (MP) IN THIS CASE THE AO ISSUED A COMMISSION UNDER S. 13 1(1)(D) TO DISTRICT VALUATION OFFICER 23 RD AUG, 1996, TO DETERMINE THE COST OF CONSTRUCTION O F THE BUILDING OF THE PURPOSE OF MAKING AN ESTIMATE O F THE INVESTMENT REFERRED TO IN S. 69, ADDITIONS WERE MADE ON THIS B ASIS AND THE ASSESSEE HAD FILED AN APPEAL BEFORE THE HIGHER AUTHORITIES C HALLENGING THAT REFERENCE TO VALUATION OFFICER IS PERMISSIBLE ONLY U/S 55A OF THE ACT TO DETERMINE THE MARKET VALUE OF CAPITAL ASSET AND MO REFERENCE CAN BE MADE U/S 131(1)(D), THE APPEAL WAS PENDING BEFORE THE HIGH COURT. DURIN G THE PENDENCY OF THE APPEAL BEFORE THE HIGH COURT THE FINANCE ACT 2004 M ADE AMENDMENT IN SECTION 142A PROVIDING THE AO WITH POWER TO MAKE A REFERENCE TO THE DVO FOR ESTIMATING THE VALUE OF INVESTMENT AND THE AMEN DMENT WAS MADE EFFECTIVE WITH RETROSPECTIVE EFFECT FROM 15.11.72. THE PROVISO TO THE SECTION PROVIDED THAT THE AMENDED SECTION WILL NOT APPLY TO ASSESSMENT WHICH HAS BECOME FINAL AND CONCLUSIVE ON OR BEFORE 30.09.2004 . IN THESE CIRCUMSTANCES THE COURT HELD THAT AS THE APPEAL IS PENDING BEFORE IT, THE ASSESSMENT HAS NOT BECOME FINAL AND CONCLUSIVE AND HENCE THE AMENDED SECTION 142A OF THE ACT WILL BE APPLICABLE AS IT HA S BEEN AMENDED W.E.F. 15.11.72 AND ACCORDINGLY THE REFERENCE MADE TO THE DVO WAS A VALID IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 79 REFERENCE. THUS THE ISSUE FOR DECISION BEFORE THE C OURT IN THAT CASE WAS WHETHER AMENDED PROVISIONS OF SECTION 142A MADE IN 2004 CAN BE MADE APPLICABLE TO CASES IN WHICH ASSESSMENTS ARE ALREAD Y COMPLETED. THUS IT WOULD BE SEEN THAT THE SAID JUDGMENT HAS NO APPLICABILITY TO THE CASE OF THE ASSESSEE. B. SHAKTI TOURIST HOME V CIT 308 ITR 228 (KERALA): THE CITATION MENTIONED IN THE ASSESSMENT ORDER IS NOT CORRECT. T HE CORRECT CITATION IS 308 ITR 0028 IN THIS CASE THE ISSUE BEFORE THE HIGH COURT WAS WH ETHER IT CAN MAKE CHANGES IN THE VALUATION MADE AND WHETHER THE ADDIT ION TOWARDS UNEXPLAINED INVESTMENT MADE BY THE AO IN ONE YEAR C AN BE SPREAD OVER MANY YEARS, IN THIS REFERENCE THE COURT HELD THAT WE DO NOT FIND WE HAVE ANY AUTHORITY TO ENTER INTO THE CONTROVERSY ON VALU ATION OF ASSETS WHICH IS A PURE FACTUAL ISSUE AND THE COURT FURTHER HELD TH AT THE CLAIM FOR SPREADING OVER OF THE INVESTMENT FOR SEVERAL YEARS CAN BE GRANTED ONLY IF IT IS PROVED THAT THE INVESTMENT IS MADE IN SEVERAL YE ARS. THERE IS NO SUCH EVIDENCE IN THIS CASE. THUS IT WOULD BE SEEN THAT THE SAID JUDGMENT HAS NO APPLICABILITY TO THE CASE OF THE ASSESSEE. C. CIT V A OLI MOHAMMAD 296 ITR 570 (MAD) THE ISSUE IN THIS CASE WAS THAT THE DVO HAD ESTIMAT ED THE COST OF CONSTRUCTION AT RS. 64,88,000/- AS AGAINST RECORDED COST OF RS. 47,42,629/-. THE ADDITION MADE WAS RESTRICTED TO RS , 9 LAKH ANT TOO WAS DIRECTED TO BE SPREAD OVER A PERIOD OF 5 YEARS BY T HE CIT(A) AND THE ITAT BOTH. THIS WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HIGH COURT AND THE HELD THAT THE VALUATION IS NOT A MATHEMATICAL PRECISION AND THERE IS BOUND TO BE DIFFERENCE BETWEEN ONE VALUER TO ANOTHE R VALUER AND IT IS ONLY A PURE QUESTION OF FACT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 80 D. CIT VS. P. MOHANAKALA (2007) 210 CTR (SC) 20: (2007 ) 291 ITR 278 (SC), REFERRED TO BY THE HIGH COURT HELD THAT WHENEVER T HERE IS A CONCURRENT FACTUAL FINDING BY THE AUTHORITIES BELOW , THE SAME SHOULD BE ACCEPTED AND NO INTERFERENCE SHOULD BE CALLED FOR B Y THE HIGH COURT THUS IT WOULD BE SEEN THAT THE ISSUE BEFORE THE HIG H COURT WAS ENTIRELY DIFFERENT 4.2.11 IN VIEW OF THE ABOVE DISCUSSION, THE COMPARATIVE PI CTURE OF INVESTMENT SHOWN BY THE ASSESSEE AND THAT ESTIMATED BY THE DVO AFTER ALLOWING MARGIN OF 30% (25% FOR DIFFERENCE IN CPWD AND PWD RATES AND 5% FOR SELF SUPERVISION) COMES OUT AS UNDER:- A.Y. DECLARED BY ASSSESSEE (RS.) 70% OF ESTIMATE MADE BY THE DVO DIFFERENCE 2011-12 1,46,28,000/- 1,32,76,404/- - SINCE, THE ASSESSEE HAS ALREADY SHOWN MORE THAN 70% OF THAT ESTIMATED BY DVO, THEREFORE, I DO NOT FIND ANY MERIT IN THE A DDITION OF RS. 43,38,292/- IN A.Y. 2010-12 MERELY MADE ON THE BASIS OF VALUATION REPORT WHICH IS NOTHING BUT AN ESTIMATE OF VALUATI ON OF COST OF INVESTMENT AND DVOS REPORT CANNOT BE TAKEN AS A CONCLUSIVE PR OOF OF UNDISCLOSED INVESTMENT MADE IN THE DIFFERENT PROJECTS OF THE AS SESSEE COMPANY. THUS, THE ADDITION AMOUNTING TO RS. 43,38,292/- IS DELETED. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. SIMILAR FINDINGS WERE GIVEN FOR SUBSEQUENT ASSESSME NT YEARS. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 81 65. AGAINST THIS ORDER OF THE LD. CIT(A), THE DEPAR TMENT IS IN APPEAL. THE LD. CIT(DR) DURING THE COURSE OF HEARIN G, SUBMITTED THAT DURING THE SEARCH AND POST SEARCH INQUIRIES, V ALUATION REPORT WAS OBTAINED FROM THE VALUATION OFFICER. THE REPORT OF THE VALUATION OFFICER CLEARLY DEMONSTRATES THAT THE COST OF CONST RUCTION SHOWN BY THE ASSESSEE WAS BELOW THE ACTUAL EXPENSES INCURRED IN CONSTRUCTION OF THE PROPERTIES. THE DIFFERENCE IN T HE VALUE SHALL THEREFORE BE TREATED AS UNDISCLOSED EXPENDITURE AND SHALL BE ADDED. 66. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT:- SUBMISSIONS: WHY REFERENCE NOT JUSTIFIED? 1. REFERENCE TO DVO IN 153A PROCEEDINGS NOT TENABLE; M OREOVER AS NO INCRIMINATING DOCUMENT SHOWING UNACCOUNTED INVESTME NT. KABUL CHAWLA (SUPRA) AND OTHERS CIT VS KHUSHAL CHAND NIRMAL KUMAR 263 ITR 77 (M.P.) PB 766-769 CIT VS MANOJ JAIN 287 ITR 285 (DEL.) PB 770-771 CIT VS SADHNA GUPTA 352 ITR 595 (DEL.) PB 772-774 2. IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE COU RSE OF SEARCH, NO ADDITION CAN BE MADE SIMPLY ON THE BASIS OF VALUATI ON REPORT. CIT VS LASHA CONSTRUCTION 357 ITR 671 (DEL.) PB 7 75-776 CIT V. NISHI MEHRA' [2015] 56 TAXMANN.COM 89 (DELHI ) CIT V. ABHINAV KUMAR MITTAL [2013] 30 TAXMANN.COM 3 57 (DELHI) IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 82 3. BOOKS NOT REJECTED. SARGAM CINEMA 328 ITR 513 (SC) PB 764-765 CIT VS VIJAYKUMAR D. GUPTA 365 ITR 470 (GUJ.) PB 7 77-779 4. IT IS ALSO BROUGHT ON RECORD THAT AT THAT TIME, THE RE WAS NO PROVISION IN THE LAW AS REGARDS GETTING VALUATION OF IMMOVABLE PROPE RTY DURING SEARCH. THIS PROVISION WAS INTRODUCED ONLY BY FINANCE ACT 2 017 W.E.F. 01.04.2017 BY INTRODUCING CLAUSE (9D) IN SECTION 132: - (9D) THE AUTHORISED OFFICER MAY, DURING THE COURSE OF THE SEARCH OR SEIZURE OR WITHIN A PERIOD OF SIXTY DAYS FROM THE DATE ON W HICH THE LAST OF THE AUTHORISATIONS FOR SEARCH WAS EXECUTED, MAKE A REF ERENCE TO A VALUATION OFFICER REFERRED TO IN SECTION 142A, WHO SHALL ESTI MATE THE FAIR MARKET VALUE OF THE PROPERTY IN THE MANNER PROVIDED UNDER THAT SECTION AND SUBMIT A REPORT OF THE ESTIMATE TO THE SAID OFFICER WITHIN A PERIOD OF SIXTY DAYS FROM THE DATE OF RECEIPT OF SUCH REFERENCE. THE SAID AMENDMENT CAME INTO EFFECT ONLY FROM 01.04 .2017. THE MEMORANDUM EXPLAINING THE FINANCE BILL EXPLAINED TH E AMENDMENT AS UNDER: IN ORDER TO ENABLE CORRECT ESTIMATION AND QUANTIFI CATION OF UNDISCLOSED INCOME HELD IN THE FORM OF INVESTMENT OR PROPERTY B Y THE ASSESSEE BY THE INVESTIGATION WING OF THE DEPARTMENT, IT IS FURTHER PROPOSED TO INSERT A NEW SUB-SECTION (9D) IN THE SAID SECTION TO PROVIDE THA T IN A CASE OF SEARCH, THE AUTHORISED OFFICER MAY, FOR THE PURPOSE OF ESTIMATI ON OF FAIR MARKET VALUE OF A PROPERTY, MAKE A REFERENCE TO A VALUATION OFFICER REFERRED TO IN SECTION 142A, FOR VALUATION IN THE MANNER PROVIDED UNDER TH AT SUB-SECTION. IT ALSO PROVIDES THAT THE VALUATION OFFICER SHALL FURNISH T HE VALUATION REPORT WITHIN SIXTY DAYS OF RECEIPT OF SUCH REFERENCE. THESE AMENDMENTS WILL TAKE EFFECT FROM LST APRIL, 2 017. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 83 IT IS SUBMITTED THAT PRIOR TO THIS AMENDMENT, NO RE FERENCE WAS POSSIBLE DURING THE COURSE OF SEARCH. THUS, IN THE PRESENT C ASE, THE REFERENCE TO VALUATION OFFICER WAS ILLEGAL. IN ANY CASE, FOLLOWING DEDUCTIONS SHALL BE GIVEN 5. NO DEDUCTION FOR SELF-SUPERVISION BY LD AO. SAME SH OULD HAVE BEEN GIVEN. LD CIT(A) GAVE 5% DEDUCTION FOR SELF-SUPERVISION. 6. LOWER DEDUCTION FOR SELF-PROCUREMENT OF MATERIALS. 7. DPAR RATES 2007 VS MP PWD RATES. CIT VS RAJ KUMAR 182 ITR 436 (ALL.) PB 780 CIT VS SMT. PREM KUMARI MURDIA (RAJ.) PB 782 8. CHART (PB 761-763) EXPLAINES THE DETAILS OF RATE AN D AMOUNT OF EXTRA ITEMS ADOPTED BY DVO, WHICH ARE NOT COVERED IN DPAR 2007. 9. IN CASE OF INCOMPLETE CONSTRUCTION, DVO HAS TAKEN V ERY HIGH VALUE. 10. ESTIMATIONAL 15% DIFFERENCE IS REASONABLE. THE VALU ATION BY DEPARTMENT ITSELF AT TWO DIFFERENT POINTS YIELDED WIDE DIFFERE NCES. C.B. GAUTHAM 199 ITR 530 (SC) 11. OMPRAKASH BAGARIA (HUF) 287 ITR 523 AND OTHER CASES , RELIED BY LD AO. DISCUSSED AND DISTINGUISHED BY LD CIT(A) PG. 79 PAR A 4.2.10. 67. WE HAVE CONSIDERED THE FACTS OF THE CASE, RIVAL CONTENTIONS, REPORT OF THE VALUATION OFFICERS, THE CASE LAWS REL IED ON AND THE ORDERS OF THE LD. LOWER AUTHORITIES. LD.CIT(A)S FI NDING OF DELETING THE ADDITION MADE BY THE LD AO ON ACCOUNT OF ALLEG ED EXCESS INVESTMENT IN CONSTRUCTION ARRIVED AT ON THE BASIS OF VALUATION REPORT OF DVO FOR AY 20011-12 TO AY 2014-15 HAS BEE N CHALLENGED IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 84 BY THE REVENUE. IN THE PRESENT CASE, THE VALUATION WAS DONE DURING THE COURSE OF SEARCH BY REGISTERED VALUER ON 31.01. 2014. SUBSEQUENTLY, DURING COURSE OF ASSESSMENT U/S. 153A , LD ASSESSING OFFICER MADE REFERENCE TO DVO U/S. 142A ON 23.12.20 15 AGAIN TO ESTIMATE THE INVESTMENT IN COST OF CONSTRUCTION. DV O SUBMITTED HIS REPORT DT. 22.03.2016 ESTIMATING YEAR-WISE VALUATIO N. WE FIND A DRASTIC DIFFERENCE IN THE APPROACH OF VALUATION OFF ICERS DURING SEARCH AND AFTER SEARCH. THE VALUATION DURING AND A FTER SEARCH IS SUMMARISED AS UNDER: (RS. IN CRORES) SR. NO . BUILDING NATURE OF CONSTRUCTION INVESTM ENT BY ASSESSEE SPOT VERIFITCATION DURING SEARCH VALUATION BY DVO DURING ASSESSMENT PB AMOU NT PB AMOUN T (1) (2) (3) (4) (5) (6) (7) (8) 1. AAKRITI AQUA CITY, VILLAGE CHHAN DUPLEX RESIDENTIAL BUILDING 83.86 1320 57.83 1304 95.37 2. AAKRITI HIGH LANDS, VILLAGE PHANDA DUPLEX RESIDENTIAL BUILDING 57.01 1324 3.83 1315 62.49 3. AAKRITI EXOTICA, VILLAGE PHANDA FARM HOUSES 5.50 740 11.01 735 7.72 4. AAKRITI NATURES CURE CENTER, VILLAGE PHANDA NATURES CURE CENTER 8.37 NA. NA 756 9.37 5. SPROUT (SCHOOL BUILDING) SCHOOL BUILDING 1.05 NA NA 1847 3.64 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 85 68. THE DRASTIC DIFFERENCE AS ABOVE IS UNEXPLAINED. TO DEMONSTRATE, DURING SEARCH, AAKRITI HIGH LANDS, VIL LAGE PHANDA WAS VALUED AT RS. 3.83 CRORES, WHEREAS DURING ASSES SMENT, IT WAS VALUED AT RS. 62.49 CRORES. THE ASSESSEE ITSELF HAS SHOWN THE COST AT RS. 57.01 CRORES. IT IS NOT UNDERSTANDABLE AS TO WHY THE DVO ADOPTED DIFFERENT APPROACH AT THE TIME OF SEARCH AN D WHEN THE VALUATION WAS REFERRED TO DVO DURING THE ASSESSMENT PROCEEDINGS. NOW IN THIS BACKGROUND, HOW THE REPORT OF DVO DURIN G ASSESSMENT CAN BE ACCEPTED AT THE FACE VALUE. FURTHER, IT HAS BEEN HELD BY THE JURISDICTIONAL HIGH COURT IN CIT VS KHUSHAL CHAND NIRMAL KUMAR 263 ITR 77 (M.P.) THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, REFERENCE TO DVO COULD NOT HAVE BEEN MADE. FURTHER, IN CIT V. NISHI MEHRA' [2015] 56 TAXMANN.COM 89 (DELHI) IT WAS CATEGORICALLY HELD THAT IF NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, MERELY ON THE RE PORT OF THE DVO ADDITION CANNOT BE MADE. FURTHER, WE AGREE WITH THE APPROACH OF LD. CIT(A) WHO GAVE 5% DEDUCTION FOR SELF-SUPERVISI ON AND ALSO 25% DEDUCTION CONSIDERING THE DIFFERENCE IN THE RATE AS PER THE DELHI PLINTH AREA RATE (DPAR) AND THE RATE EXISTING IN M. P. PWD AND THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 86 SELF-PROCUREMENT OF MATERIALS BY THE BUILDER HIMSEL F. LD. CIT(A) RELIED ON THE JUDGMENT OF CIT VS RAJ KUMAR 182 ITR 436 (ALL.) AND CIT VS SMT. PREM KUMARI MURDIA (RAJ.). CONSIDERING OVERALL FACTS, LD. CIT(A) THEREFORE WAS JUSTIFIED IN REDUCING THE VALU ATION OF THE DVO BY 30%. AFTER GIVING THE DEDUCTION OF 30% AS ABOVE, THE VALUATION AS PER THE LD CIT(A) CAME AS UNDER: F.YR. A.YR. DECLARED BY ASSESSEE ESTIMATED BY DVO PB 1298- 1309 ADDITION BY AO (3) (4) ESTIMATION BY DVO AFTER DEDUCTION FOR SELF- SUPERVISION AND CPWD VS PWD RATES (4) 30% NET ADDITION (3) (6) (1) (2) (3) (4) (5) (6) (7) 2010 - 11 2011 - 12 1,46,28,000 1,89,66,292 43,38,292 1,32,76,404 - 2011 - 12 2012 - 13 31,59,16,000 35,77,90,359 4,18,74,359 25,04,53,251 - 2012 - 13 2013 - 14 50,70,31,000 56,87,92,538 6,1 7,61,538 39,81,54,777 - 2013 - 14 2014 - 15 71,16,14,000 82,94,54,913 11,78,40,913 58,06,18,439 - 69. WE THEREFORE RESPECTFULLY FOLLOWING THE JUDGMEN T OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS KHUSHAL CHAND NIRMAL KUMAR (SUPRA) AND THAT OF HONBLE DELHI HIGH COURT IN THE CASE O F CIT V. NISHI MEHRA (SUPRA) AND ALSO CONSIDERING THE FACTS OF THE CASE THAT TH ERE IS A HUGE DIFFERENCE IN VALUATION BY THE REGISTERED VALUER AND THAT OF THE DVO, BOTH BEING APPOINTED BY THE DEPARTMENT, THE AD DITION AFTER GIVING DEDUCTION FOR SELF-SUPERVISION, SELF-PROCUREMENT OF MATERIALS AND THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 87 DEDUCTION FOR RATE DIFFERENCE IN PWD AND DPAR RATES AND THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO SHOW ANY UNACCOUNTED EXPENDITURE, FIND NO REASON TO INTE RFERE IN THE FINDING OF LD. CIT(A) AND THUS DISMISS REVENUES GROUND NO. 1 FOR A.Y. 2011-12, GROUND NO. 1 FOR A.Y. 2012-13, GROUND NO. 1 FOR A.Y. 2013-14 AND GROUND NO. 2 FOR A.Y. 2014-15 . 70. NOW WE TAKE UP GROUND NO. 2 FOR A.Y. 2011-12 OF THE DEPARTMENTS APPEAL DEALING WITH UNACCOUNTED RECEIP TS OF RS. 5,00,000 COVERED IN LPS A-2. 71. THE FACTS OF THE CASE ARE THAT DURING THE COURS E OF SEARCH A DOCUMENT MARKED AS LPS A-2 PG. 29 WAS FOUND WHICH W AS ALLEGEDLY A MEMORANDUM ACCOUNT OF ONE CUSTOMER SHRI RAJKUMAR GUPTA. AS PER THIS PAGE, IT WAS MENTIONED THAT THE CONSIDERAT ION FOR FLAT WAS RS. 16,00,000. THE PAPER ALSO MENTIONED THE DATE, I NSTALLMENT AMOUNT AND MODE OF PAYMENT. AN AMOUNT OF RS. 5,00,0 00 WAS MENTIONED TO BE RECEIVED IN CASH, AND THUS TOTAL AM OUNT RECEIVED WAS SHOWN AT RS. 16,00,000. LD. CIT(A) DELETED THE ADDITION HOLDING THAT AS PER THE BOOKS OF ACCOUNTS RS. 16,00,000 WAS ONLY RECEIVED. THUS, THERE WAS NO DIFFERENCE IN THE AMOUNT RECEIVE D AS PER THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 88 BOOKS AND AS PER THE LOOSE PAPER. THE ONLY DIFFEREN CE WAS IN THE MODE OF RECEIPT. FURTHER, NO INQUIRY WAS CONDUCTED FROM THE CUSTOMER TO INQUIRE INTO THE TRUTH OF THE MATTER, M OREOVER WHEN THE ASSESSEE HAD CLEARLY DENIED TO HAVE RECEIVED ANY CA SH AMOUNT FROM THE CUSTOMER. 72. LD. CIT(DR) RELIED ON THE ORDER OF LD. AO, WHER EAS LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF LD. CIT(A). 73. WE HAVE CONSIDERED THE FACTS OF THE CASE AND DO NOT FIND ANY DISCREPANCY IN THE ORDER OF THE LD. CIT(A). LD. CIT (DR) COULD NOT POINT OUT ANY EVIDENCE TO PROVE THAT ANY AMOUNT WAS RECEIVED IN CASH FROM THE CUSTOMER. THE AMOUNT RECEIVED AS PER THE BOOKS TALLIES WITH THE AMOUNT RECEIVED AS PER THE LOOSE P APER. THE ADDITION IS UNCALLED FOR. WE THEREFORE DISMISS THIS GROUND OF DEPARTMENTS APPEAL. 74. NOW WE TAKE UP GROUND NO. 3 OF DEPARTMENTS APP EAL FOR A.Y. 2011-12 RELATING TO UNEXPLAINED INVESTMENT OF RS. 2 1,00,000 AS PER LPS 3 PG. 23 TO 39. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 89 75. THE FACTS RELATING TO THIS GROUND OF APPEAL ARE THAT DURING THE COURSE OF SEARCH ACTION AT THE RESIDENCE OF SHRI HE MANT KUMAR SONI, WHO WAS THE CMD OF THE ASSESSEE COMPANY, A JO INT DEVELOPMENT AGREEMENT BETWEEN M/S. AASHIRWAD SKY HE IGHTS PVT LTD. AND M/S. AG8 VENTURES LTD FOR DEVELOPMENT OF A LAND AT INDORE WAS FOUND AND SEIZED. AS PER THIS DOCUMENT PAYMENT OF RS. 5,92,00,000 WAS TO BE MADE INCLUDING INTER-ALIA A P AYMENT OF RS. 21,00,000 WHICH WAS IN CASH. THE ALLEGED PAYMENT WA S STATED TO HAVE BEEN MADE ON 11.08.2010. REST OF THE PAYMENTS WERE STATED TO BE BY CHEQUES AS PER THIS AGREEMENT. LD. AO NOTE D THAT THIS CASH PAYMENT OF RS. 21,00,000 WAS NOT RECORDED IN THE BO OKS. HE THEREFORE ADDED THIS SUM OF RS. 21,00,000. 76. AGAINST THIS ADDITION, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION AT PAGE 96 TO 98 HOLDING AS UNDER: 4.4.2 I HAVE CONSIDERATION THE FACTS OF THE CASE, EVIDENC E ON RECORD AND FINDINGS OF THE AO. THIS IS AN UNDISPUTED FACT THAT APPELLANT HAS ENTERED INTO AN AGREEMENT WITH M/S. AASHIRWAD SKY HEIGHTS T OWER PVT. LTD. THE AO HAS ALLEGED THAT APPELLANT HAS PAID SUM OF RS. 21,0 0,000/- TOWARDS SECURITY DEPOSIT AS PER AGREEMENT. HOWEVER, APPELLA NT HAS CONTENDED THAT ALL THE PAYMENTS WERE MADE THROUGH CHEQUE TO THE TU NE OF RS. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 90 4,80,00,000/- AND NO TRANSACTION WAS MADE IN CASH. APPELLANT HAS ALSO BROUGHT TO MAY NOTICE THAT STATEMENT OF SHRI MAHEND RA SINGH NAMDEO WAS ALSO RECORDED WHEREIN, HE HAS ADMITTED THAT THE ALL THE PAYMENTS OF RS. 4,80,00,000/- WERE RECEIVED THOUGHT CHEQUE AND THE BALANCE AMOUNT IS STILL OUTSTANDING. AFTER CONSIDERING THE FACTS INTERALIA PLEA RAISED BY THE APPELLANT IT CAN BE SAFELY HELD THAT THE AO HAS NO COGENT/CORROBORATIVE EVIDENCE ON RECORD WHICH COULD PROVE THAT ANY SUCH EXCHANGE OF CASH ACTUALLY TOOK PLACE. FURTHER, NEITHER THE APPELLANT OR ITS DIRECTOR NOR SHRI MAHENDRA SINGH NAMDEO HAS EVER STATED/ADMITTED THAT A SUM OF RS. 21,00,000/- WAS RECEIVED FROM APPELLANT COMPANY TOW ARDS THE SECURITY DEPOSIT. THE ENTIRE ADITION HAS BEEN MADE ON ASSUMP TION AND PRESUMPTION BASIS WHICH IS NEITHER JUSTIFIED NOR CORRECT IN THE EYES OF LAW. IT IS A SETTLED FACTS THAT PRESUMPTION HOW STRONG MAY CANNOT TAKE P LACE OF EVIDENCE. 4.4.3 NEVERTHELESS, THE AO HAS GROSSLY ERRED IN MAKING AD DITION SIMPLY OF THE BASIS OF GUESS WORK, ASSUMPTION AND PRESUMPTION . IT IS WELL SETTLED THAT NO DISALLOWANCE CAN BE MADE AS A LEAP IN THE DARK. THE AO HAS IS NOT ENTITLED TO MAKE A GUESS WITHOUT EVIDENCE. THE ASSE SSMENT OF ANY PARTICULAR YEAR CANNOT BE BASED ON MERE SUSPICION OR BARE GUES S, BUT ON A LEGITIMATE MATERIAL FROM WHICH A REASONABLE INFERENCE OF ANY E XPENDITURE BEING OF THE DISALLOWABLE NATURE COULD BE DRAWN AND THAT THE INI TIAL BURDEN OF FINDING SUCH MATERIAL IS ON THE AO AS HELD BY HONBLE HIGH COURT ORISSA IN THE CASE OF BANSIDHAR ONKARAMALL VS. CIT (1953) 23 ITR 353 ( ORISSA). HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S. CIT (1954) 26 ITR 775 (SC) HAS HOLD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDING, STILL ASSESS MENT CANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEE N HELD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) TH AT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (1954) 26 ITR 736 (SC). ALSO, ONCE THE ASSESSEE HAS DISCHARGED ITS ONUS OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 91 PROVING THAT THE PARTIES UNDER CONSIDERATION ARE GE NUINE, NOW THE BALL LIES IN THE COURT OF AO TO PROVE THAT THE CLAIM OF APPELLAN T IS FALSE AND INCORRECT. FURTHER, SHRI MAHENDRA SINGH NAMDEO HAS NEVER STATE D THAT A SUM OF RS. 21,00,000/- WAS RECEIVED IN CASH FROM APPELLANT AGA INST THE SECURITY DEPOSIT. THUS, IN VIEW OF THE ABOVE, THE AO WAS NOT JUSTIFIED IN MAKING ADDITION WITHOUT BRINGING ANY CLINCHING EVIDENCE ON RECORD WHICH COULD PROVE ANY SUCH EXCHANGE OF CASH TOOK PLACE. THUS, K EEPING IN VIEW THE VARIOUS CASE LAWS CITED ABOVE, THE ADDITION MADE BY THE AO AMOUNTING TO RS. 21,00,000/- IS DELETED BEING MADE ON ASSUMPTION AND PRESUMPTION BASIS. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. 77. AGAINST THIS ORDER OF LD. CIT(A), THE DEPARTMEN T IS IN APPEAL. LD. COUNSEL FOR THE REVENUE CONTENDED THAT DURING S EARCH, THE JOINT DEVELOPMENT AGREEMENT WAS FOUND, WHICH CLEARLY STAT ED THAT A PAYMENT OF RS. 21,00,000 WAS MADE IN CASH. THE ADDI TION IS THEREFORE JUSTIFIED. LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND SUBMITTED THAT NO CASH PAYMENT OF RS. 21,00,000 WAS MADE AS STATED IN THE AGREEMENT. A PAYMENT OF RS. 4,80,00,0 00 WAS MADE UPTO THE DATE OF SEARCH, WHICH WAS MADE BY BANKING CHANNEL. THIS FACT WAS ALSO CONFIRMED BY SHRI MAHENDRA SINGH NAMD EO OF AASHIRVAD SKY HEIGHTS TOWER PVT LTD. IN HIS STATEME NT RECORDED U/S. 131 ON 29.05.2014. SHRI MAHENDRA SINGH NAMDEO DENIED CASH RECEIPT FROM ASSESSEE COMPANY, AND ALSO THE CASH PA YMENT WAS DENIED BY ASSESSEE COMPANY. LD. COUNSEL CONTENDED T HAT THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 92 WRITING IN THE AGREEMENT WAS NOT CORROBORATED. HE T HEREFORE RELIED ON THE ORDER OF LD. CIT(A). 78. WE HAVE CONSIDERED THE FACTS OF THE CASE, THE O RDERS OF THE LD. LOWER AUTHORITIES AND THE EVIDENCE ON RECORD. IT IS AN UNDISPUTED FACT THAT APPELLANT HAS ENTERED INTO AN AGREEMENT W ITH M/S. AASHIRWAD SKY HEIGHTS TOWER PVT. LTD. THE LD. AO HA S ALLEGED THAT ASSESSEE HAS PAID SUM OF RS. 21,00,000/- TOWARDS SE CURITY DEPOSIT AS PER AGREEMENT. HOWEVER, ASSESSEE HAS CONTENDED T HAT ALL THE PAYMENTS WERE MADE THROUGH CHEQUE TO THE TUNE OF RS . 4,80,00,000/- AND NO TRANSACTION WAS MADE IN CASH. ASSESSEE HAS ALSO BROUGHT TO OUR NOTICE THAT STATEMENT OF SHRI M AHENDRA SINGH NAMDEO WAS ALSO RECORDED WHEREIN, HE HAS ADMITTED T HAT THE ALL THE PAYMENTS OF RS. 4,80,00,000/- WERE RECEIVED THROUGH CHEQUE AND THE BALANCE AMOUNT IS STILL OUTSTANDING. WE FIND TH AT ALTHOUGH THE AGREEMENT RAISES SUSPICION THAT CASH PAYMENT WAS MA DE BY ASSESSEE COMPANY OF RS. 21,00,000; BUT THIS SUSPICI ON IS NOT CONFIRMED BY THE DEPARTMENT BY PROVIDING ANY EVIDEN CE ON RECORD. BOTH THE PARTIES TO THE TRANSACTION DENIED THIS CAS H PAYMENT. IN THE BOOKS OF M/S. AASHIRVAD SKY HEIGHTS TOWER PVT LTD, THIS AMOUNT IS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 93 NOT SHOWN TO HAVE BEEN RECEIVED. ON BEING ASKED, IT WAS INFORMED THAT NO ACTION WAS TAKEN IN THE CASE OF M/S. AASHIR VAD SKY HEIGHTS TOWER PVT LTD. THE ADDITION THEREFORE LACKS MERITS. WE THEREFORE DISMISS THIS GROUND OF APPEAL OF THE DEPARTMENT. 79. WE NOW TAKE UP GROUND NO. 4 OF A.Y. 2011-12 (RS . 3,10,00,000) AND GROUND NO. 3 OF A.Y. 2012-13 (RS. 54,62,000) OF REVENUES APPEAL RELATING TO LOOSE PAPER LPS A-28 P AGE 75 DEALING WITH UNACCOUNTED INVESTMENT IN SHARES OF M/S. MAA B HAGWATI SUGAR MILLS LTD (MBSM). 80. THE FACTS OF THE CASE ARE THAT DURING THE COURS E OF SEARCH AT THE OFFICE PREMISES OF THE ASSESSEE COMPANY, A LOOS E PAPER LPS A-28 PAGE NO. 75 WAS SEIZED. THE TITLE WAS DETAILS OF I NVESTMENT IN SHARES OF MA BHAGWATI SUGAR MILLS LTD. ON THE UPPE R PART OF THE LOOSE PAPER SOME DETAILS WERE MENTIONED SHOWING CHE QUE PAYMENTS FOR INVESTMENT IN MBSM WHICH WAS COMPUTER GENERATED . ON THE LOWER PART OF THE LOOSE SHEET, A HAND WRITTEN JOTTI NG WAS MENTIONED WHEREBY IT WAS MENTIONED AS UNDER: TOTAL SALE CONSIDERATION 575.62 LESS PAID TILL 20.03.11 350 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 94 81. ON THE BASIS OF THIS HANDWRITTEN NOTING, IT WAS CONTENDED BY THE LD. AO IN HIS ORDER THAT ON-MONEY WAS PAID AT R S. 310 LAKHS IN THE F.Y. 2010-11 AND RS. 54.62 LAKHS IN THE F.Y. 20 11-12. LD. AO FURTHER REFERRED TO AN UNSIGNED MOU FOUND BETWEEN S HRI BHARAT BHUSHAN PATEL AND ASSESSEE-COMPANY. AS PER THIS UNS IGNED DOCUMENT, IT WAS MENTIONED THAT BOTH THE PARTIES WO ULD DESTROY CERTAIN DOCUMENTS AND IN CASE THE DOCUMENT IS FOUND FROM EITHER OF THE PARTIES, ANY LOSSES TO THE PARTY BECAUSE OF SUC H DISCOVERY WOULD BE THE RESPONSIBILITY OF THE PARTY FROM WHOSE POSSE SSION SUCH DOCUMENTS WERE FOUND. LD AO THEREFORE CONCLUDED THA T UNEXPLAINED INVESTMENT WERE MADE BY ASSESSEE COMPAN Y IN ACQUISITION OF SHARES OF M/S. MA BHAGWATI SUGAR MIL LS LTD AND HE ADDED RS. 3,10,00,000 IN A.Y. 2011-12 AND RS. 54,62 ,000 IN A.Y. 2012-13. CASH 310 CHEQUE DUE 40 BALANCE DUE IN CHEQUE 171 BALANCE MUST HAVE BEEN PAID IN B (NOT ACCOUNTED) PLS CONFIRM? 54.620 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 95 82. AGAINST THIS ADDITION, ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION AT PAGE 101-112, VIDE PARA 4.5.3 ONWARDS: SIMILAR FINDING WAS GIVEN BY LD .CIT(A) DEALING WITH THE SAME ISSUE FOR A.Y. 2012-13 DELETING THE A DDITION OF RS. 54,62,000. 83. AGAINST THIS ORDER, THE REVENUE IS IN APPEAL. A T THE OUTSET, LD. CIT(DR) REFERRED TO THE LOOSE PAPER LPS A-28 PAGE N O. 75 AND CONTENDED THAT IT CLEARLY MENTIONS THAT RS. 310 LAK HS IS PAID IN CASH TILL 20/3/11. FURTHER, AGAINST BALANCE RS. 54. 62 LAKHS AS MENTIONED AT THE END OF THE PAGE, IT IS MENTIONED BALANCE MUST HAVE BEEN PAID IN B (NOT ACCOUNTED). THIS DOCUME NT IS CLINCHING DOCUMENT TO ESTABLISH ON-MONEY PAYMENT. HE FURTHER STATED THAT THE MOU FOUND ALSO STATED THAT CERTAIN DOCUMENTS WO ULD BE DESTROYED LATER ON. HE THEREFORE SUBMITTED THAT THE ADDITION FOR UNEXPLAINED INVESTMENT AS DONE BY THE LD. AO BE CON FIRMED. 84. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT IT IS UNCONTROVERTED THAT ASSESSEE COMPANY PURCHASE D THE SHARES OF MAA BHAGWATI SUGAR MILLS (IN SHORT MBSM) FROM BHA RAT BHUSHAN PATEL AND HIS FAMILY MEMBERS. THE TRANSACTION WAS M ADE BY CHEQUE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 96 AND WERE DULY RECORDED IN THE BOOKS. HE REFERRED TO THE BALANCE SHEET OF 31.03.2009, AT PB 64 AND STATED THAT THE I NVESTMENT IN MBSM WAS RECORDED AT RS. 6.59 CRORES. FURTHER, AT P B 88, IN BALANCE SHEET OF 31.03.2010, THE INVESTMENT IN MBSM WAS REFLECTED AT RS. 9.27 CRORES. FURTHER, AT PB 163, I N BALANCE SHEET OF 31.03.2011, INVESTMENT IN MBSM OF RS. 20.47 CRORES WAS REFLECTED. FURTHER, AT PB 188, IN THE BALANCE SHEET OF 31.03.2 012, INVESTMENT IN MBSM WAS REFLECTED AT RS. 21.72 CRORES. HE ALSO REFERRED TO PB 232, WHICH WAS THE BALANCE SHEET OF 31.03.2013, WHE RE THE INVESTMENT IN MBSM WAS REFLECTED AT RS. 21.72 CRORE S. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALTHOUGH THIS LOOSE PAPER WAS FOUND FROM THE PREMISES OF THE ASSESSEE COMPANY, TH E PRINTED DOCUMENT REFERRED TO THE CHEQUE PAYMENTS, WHICH WER E DULY RECORDED IN THE BOOKS. HOWEVER, AT THE BOTTOM OF TH E PAGE, SOME HANDWRITTEN ROUGH NOTING WAS MADE. HE SUBMITTED THA T WHO MADE THE ROUGH NOTING AND FOR WHAT PURPOSE THE SAME WAS MADE WAS UNKNOWN AND WAS NEVER ENQUIRED BY THE DEPARTMENT DU RING AND AFTER SEARCH. FURTHER, NO ENQUIRY WAS MADE FROM SHR I BHARAT BHUSAN PATEL REGARDING ALLEGED CASH PAYMENT. DURING SEARCH, SHRI IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 97 HEMANT KUMAR SONI WAS ASKED ABOUT THE ALLEGED DOCUM ENT AND HE STATED THAT NO CASH PAYMENT WAS MADE. SO FAR AS THE MOU WAS CONCERNED, IT WAS CONTENDED THAT NEITHER THE PARTIE S, NOR THE WITNESS HAVE SIGNED IT. THE DOCUMENT HAD NO VALUE, AS IT WAS A MERE TYPE WRITTEN DOCUMENT. WHO MADE IT AND FOR WHA T PURPOSES IT WAS MADE IS UNKNOWN. IT WAS FOUND FROM THE RESIDENC E OF ONE EMPLOYEE SHRI YASHOVARDHAN JAIN. THE MOU STATED ONL Y THE PROPOSED PAYMENTS THROUGH POST DATED CHEQUES. IT DO ES NOT SAY THAT ANY EXCESS AMOUNT WAS PAID BY THE ASSESSEE COM PANY. IT WAS FURTHER CONTENDED THAT MSBM WAS IN LOSSES, AS STATE D BEFORE THE SEARCH PARTY AND LATER DURING ASSESSMENT. THE CONST RUCTION OF BUILDING WAS ALSO GOING ON. THUS, THERE WAS NO REAS ON FOR MAKING ANY EXCESSIVE PAYMENT. IT WAS CONTENDED LASTLY, THA T NO EXCESSIVE PAYMENT WAS MADE, AND THE AMOUNT RECORDED IN THE BO OKS WAS ALREADY HIGHER THAN THE AMOUNT MENTIONED IN THE LOO SE SHEET. THUS, THE ALLEGATION OF UNEXPLAINED EXPENDITURE WAS BASEL ESS. 85. WE HAVE CONSIDERED THE FACTS OF THE CASE, THE R IVAL SUBMISSIONS, EVIDENCE ON RECORD AND THE ARGUMENTS O F BOTH THE PARTIES. AFTER CAREFULLY EXAMINING THE CONTENTS OF THE DOCUMENT, IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 98 ALONGWITH THE BOOKS OF ACCOUNTS, WE FIND THAT THIS DOCUMENT IS NOTHING BUT A DUMB DOCUMENT. THE INVESTMENT IN SHAR ES OF MBSM WAS RECORDED IN THE BALANCE SHEET AT RS. 9.27 CRORE S ON 31.03.2010. ON 31.03.2011, THE INVESTMENT WAS REFLE CTED AT RS. 20.47 CRORES. THUS THERE WAS AN INCREASE OF RS. 11. 20 CRORES. SIMILARLY ON 31.03.2012, THE INVESTMENT WAS REFLECT ED AT RS. 21.72 CRORES; AND THUS THERE WAS AN INCREASE OF RS. 1.25 CRORES. THIS LOOSE PAPER MENTIONS THE CONSIDERATION OF RS. 5.75 CRORES. THE FIGURE IN THE LOOSE PAPER IS SUBSTANTIALLY LOWER TH AN THAT RECORDED IN THE BOOKS. THE TRANSACTION MENTIONED IN THE LOOSE P APER DOES NOT CORRELATE WITH THE ACCOUNTED TRANSACTION; MOREOVER, THE ACCOUNTED TRANSACTION IS AT A HIGHER VALUE. IT SEEMS THAT THE RE WAS SOME ROUGH NOTING ON THIS LOOSE PAPER BY SOME UNKNOWN PERSON, WHICH LD. AO HAS INTERPRETED AS UNACCOUNTED PAYMENT. HAD THE MAK ER OF THE LOOSE PAPER AND THE PURPOSE FOR WHICH IT WAS MADE B EEN ENQUIRED, THE TRANSACTION THEREIN COULD HAVE BEEN DECIPHERED. NO EFFORT WAS MADE BY THE LD. AO IN THIS REGARD. A TRANSACTION WH ICH IS ALREADY AT RS. 11.20 CRORES IN F.Y. 2010-11 AND RS. 1.25 CRORE S IN F.Y. 2012- 13, HOW CAN SUCH TRANSACTION BE COMPARED WITH THE L OOSE JOTTING IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 99 WHICH STATES THE TRANSACTION AT RS. 5.75 CRORES, MO REOVER WHEN IT IS UNKNOWN AS TO WHO WROTE IT AND FOR WHAT PURPOSES. I N SO FAR AS THE MOU IS CONCERNED, WE AGREE WITH THE CONTENTION OF T HE LD. COUNSEL FOR THE ASSESSEE THAT THE DOCUMENT IS UNSIGNED BY A NY OF THE PARTIES, AND NOT EVEN SIGNED BY THE WITNESSES. THE DOCUMENT IS A MERE TYPEWRITTEN DOCUMENT, NOT EVEN FOUND FROM THE OFFICE OF COMPANY. THIS MOU STATED ONLY THE PROPOSED PAYMENTS THROUGH POST DATED CHEQUES AND DOES NOT STATE ABOUT ANY EXC ESS AMOUNT PAID BY ASSESSEE COMPANY. NO INQUIRY WHAT-SOEVER WA S BROUGHT ON RECORD TO HAVE BEEN CONDUCTED FROM SHRI BHARAT BHUS HAN PATEL. RELEVANT EXTRACT OF FINDING OF LD.CIT(A) DELETING T HE IMPUGNED ADDITION READS AS FOLLOWS:- 4.5.3 I HAVE CONSIDERED THE FACTUAL MATRIX OF THE CASE, W RITTEN SUBMISSION FILED AND ASSESSMENT ORDER. DURING THE COURSE OF SE ARCH PAGE NO. 75 OF LPS- A-28 WAS FOUND AND SEIZED FROM OFFICE PREMISES OF A PPELLANT WHICH IS ALSO SCANNED ON PAGE NO 61 OF ASSESSMENT ORDER. THE IMPO UNDED PAPER I.E. PAGE NO75 OF LPS-A-28 IS A MOU FOR PURCHASE OF SHARE OF M/S MAA BHAGWATI SUGAR MILLS LTD AND IS A DOCUMENT WHICH CONTAIN SOM E ROUGH NOTHINGS/JOTTINGS IN THE BOTTOM OF THE PAGE. APPELL ANT DURING APPELLATE PROCEEDINGS SUBMITTED THAT NO OVER AND ABOVE CONSID ERATION WAS PAID IN ADDITION TO WHAT IS DISCLOSED IN BOOKS OF ACCOUNT. THE IMPUGED LOOSE PAPER FOUND IN POSSESSION IS AN UNDATED, UNSIGNED AND ONL Y REPRESENTS ROUGH WORKING/JOTTINGS/SCRIBBLING. AFTER CONSIDERING THE ENTIRE FACTUAL MATRIX AND IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 100 EVIDENCE/MATERIAL ON RECORD INTER ALIA WRITTEN SUBM ISSIONS FILED. I REACH TO CONCLUSION THAT IMPUNGED ADDITION WAS MADE ON THE B ASIS OF ASSUMPTION AND PRESUMPTION WHICH NEITHER SUSTAINABLE ON FACTS NOR IN LAW. THE AO HAS REACHED TO CONCLUSION THAT APPELLANT HAS MADE UNEXP LAINED INVESTMENT OF RS. 3,10,00,000/- IN PURCHASE OF SHARES OF M/S MAA BHAGWATI SUGAR MILLS LTD. APPELLANT DURING APPELLATE PROCEEDINGS HAS STR ONGLY CONTENTED THAT APPELLANT NEVER PAID ANY AMOUNT OVER AND ABOVE THAT IS MENTIONED IN AUDITED BOOKS OF ACCOUNT. THIS DOCUMENT HAS BEEN SCANNED ON PAGE 61 OF ASSESS MENT ORDER. ON A PLAIN AND CURSORY LOOK WOULD MAKE IT AMPLY CLEAR TH AT THIS PAPER IS RELATING TO SOME WORKING ON INVESTMENT IN SHARES OF M/S MAA BH AGWATI SUGAR MILLS LTD. THE AO HAS ALLEGED THAT SUM OF RS. 3,10,00,000/- WA S PAID IN CASH BY THE APPELLANT TO BHARAT BHUSHAN PAT EL AND OTHERS. ON THE CONTRARY APPELLANT SUBMITTED THAT THE PRESUMPTION M ADE BY THE AO IS WITHOUT ANY INCRIMINATING MATERIAL ON RECORD WHICH COULD PROVE THAT SUM OF RS. 3,10,00,000/- WAS PAID OVER AND ABOVE THE CONSI DERATION AS MENTIONED IN BOOKS OF ACCOUNT. APPELLANT HAS ARGUED THAT THE ROUGH WORKINGS AS MENTIONED IN THE BOTTOM OF LOOSE PAPER CANNOT BE MA DE BASIS OF ADDITION, UNTIL AND UNLESS ANY COGENT OR INCRIMINATING DOCUME NT IS FOUND IN SUPPORT OF TRANSACTION. FURTHER, THE AO HAS NEITHER EXAMINATIO N BHART BHUSHAN PATEL NOR HIS BROTHER OR FAMILY MEMBER REGARDING THE IMPU NGED LOOSE PAPER AND THE ENTIRE ADDITION HAS BEEN MADE ON SHEER PRESUMPT ION AND ASSUMPTION BASIS. FURTHER, THE AO HAS ALSO FAILED TO BRING ON RECORD ANY COGENT EVIDENCE, CREATING DIRECT NEXUS OF RECEIPT OF RS. 3 ,10,00,000/- BY THE APPELLANT. THEREFORE, IN ABSENCE OF ANY COGENT EVID ENCE HAVING DIRECT NEXUS WITH THE IMPUNGED TRANSACTION, THE SAID IMPUNGED PA PER I.E. PAGE NO 75 OF LPS-A-28 CANNOT BE USED AGAINST THE ASSESSEE. 4.5.4 THIS IS SETTLED LEGAL POSITION THAT ANY DUMB DOCUM ENT CANNOT BE USED AS AN EVIDENCE TO DRAW AN ADVERSE INFERENCE AG AINST THE ASSESSEE. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 101 4.5.5 THE AO HAS MADE ALLEGATION AGAINST THE ASSESSEE THA T THE HAS RECEIVED THAT HE HAS RECEIVED RS. 3,10,00,000/- TO SHRI BHARAT BHUSHAN PATEL AND OTHER AS MENTIONED ON LOOSE PAPER S 75 OF LPS-A- 28 IN CASH. IN ABSENCEOF ANY ADMISSION ANY ENTIRE B Y SHRI BHARAT BHUSHAN PATEL AND OTHER OR ANY INCRIMINATING DOCUM ENTS/PAPER TO ESTABLISH THAT ASSESSEE HAS PAID SUM OF RS. 3,10,00 ,000/-. IN CASH, THE IMPUNGED ADDITION IS NOT SUSTAINABLE IN THE EYE S OF LAWS. THE APPELLANT HAS ALSO STATED THAT THE AO BY MAKING A G ENERAL OBSERVATION HAS STATED THAT PREVIOUS PROMOTERS HAS PAID SOME CONSIDERATION IN CASH TO THE SELLER PARTY. APPELLAN T HAS BROUGHT TO MY NOTICE THAT ANOTHER LOOSE PAPER (ANOTHER MOU, UN DATED AND UNSIGNED) WAS FOUND IN POSSESSION OF SHRI YASHOVARD HAN JAIN I.E. PAGE NO. 64 WHICH STATES THAT APPELLANT SHALL PAY S UM OF RS. 1,41,00,000/- TOWARDS PURCHASE OF SHARE OF MAA BHAG WATI SUGARS MILL LTD. HAS BEEN ACCEPTED AS TRUE BY THE AO WITHO UT ANY THOROUGH EXAMINATION.THUS, THE ONLY INFERENCE WHICH CAN BE D RAWN FROM THIS IS THAT THE SEIZED LOOSE PAPER IS NOTHING BUT REPRE SENT ROUGH WORKINGS/JOTTINGS/SCRIBBLING. IT IS SETTLED LEGAL P OSITION THAT ONUS OF PROOF IS ON THE PERSON WHO MAKES ANY ALLEGATION AND NOT ON THE PERSON WHO HAS TO DEFEND. AS PER LEGAL MAXIM AFFAIRMANTI NON NEGANTI INCUMBIT PROBATION MEANS BURDEN OF PROOF LIES UPON HIM WHO AFFIRM AND NOT UPON HIM WHO DENIES. SIMILARLY A S PER DOCTRINE OF COMMON LAW INCUMBIT PROBATION QUI DIGIT NON QUI NEGAT I.E. BURDEN LIES UPON ONE WHO ALLEGES AND NOT UPON ONE W HO DENY THE EXISTENCE OF THE FACT. THE LOOSE PAPER I.E. PAGE 75 OF LPD-A-28 IS ROUGH WORKING/JOTTING. THE AO HAS FILED TO DISCHARG E HIS ONUS OF PROOF ESPECIALLY WHEN ADDITION HAS BEEN MADE UNDER DEEMING FICTION. IN VIEW OF THIS LACUNE ON THE PART OF AO, IMPUNGED ADDITION IS LEGALLY NOT SUSTAINABLE. AS HELD IN THE CASE OF CIT V/S KP VARGHESE 131 ITR 574 (SC) BY HOBBLE APEX COURT IN ABSENCE OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 102 EVIDENCE THAT ACTUALLY ASSESSEE PAID MORE AMOUNT TH AN DECLARED IN REGARDED DEED, NO ADDITION CAN BE MADE. IN THE CASE OF BANSAL STRIPS (P) LTD. & ORS VS. ACIT (2006) 99 ITD 177 (D EL) IT HAS BEEN HELD THAT:- IF AN INCOME NOT ADMITTED BY ASSESSEE IS TO BE ASS ESSEE IN THE HANDS OF THE ASSESSEE. THE BURDEN TO ESTABLISH THE SUCH INCOME IS CHARGEABLE TO TAX IS ON THE AO. IN THE ABSENCE OF A DEQUATE MATERIAL AS TO NATURE AND OWNERSHIP OF THE TRANSACTIONS, UND ISCLOSED INCOME CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE MER ELY BY ARITHMETICALLY TOTALLY VARIOUS FIGURES JOTTED DOWN ON LOOSED DOCUMENTS. 4.5.7 IN VIEW OF THE ABOVE DISCUSSION, MATERIAL EVIDENCES ON RECORD AND CASE LAWS CITED, FIRSTLY, THE AO OUGHT TO HAVE EXAM INED BENEFICIAL I.E. SHRI BHARAT BHUSHAN PATEL AND ORDER WHO WERE ACTUAL LY INVOLVED IN THE IMPUGNED TRANSACTION SECONDLY, THE AO SHOULD HA VE DONE INDEPENDENT ENQUIRY REGARDING THE IMPUGNED TRANSACT ION. THIRDLY, THE LOOSE PAPER OR RATHER SAY IT AS DUMB DOCUMENTS SHOULD BE A SPEAKING ONE HAVING DIRECT NEXUS WITH THE ASSESSEE, WHICH WAS NOT IN THE CASE OF APPELLANT. FOURTHLY, THE AO BEING OF CONSIDERED OPINON THAT VASH OF RS. 3,10,00,000/- WAS PAID BY THE APPE LLANT COMPANY FOR PURCHASING SHARES OF M/S MAA BHAGWATI SUGAR MIL L LTD. SHOULD HAVE REJECTED BOOKS OF ACCOUNT OF THE APPELLANT WHI CH WAS ALSO NOT DONE. FIFTHLY, IT IS SETTLED LEGAL PRONOUNCEMENT TH AT PRESUMPTION HOW STRONG MAY, CANNOT TAKE PLACE OF EVIDENCE. LAST BUT NOT THE LEAST, NEITHER THE BENEFICERY NOR ANY OF THE PARTNER OF AP PELLANT HAS EVER STATED THAT SUCH TRANSACTION ACTUALLY OCCURRED. MY FINDINGS ON THE ISSUE UNDER CONSIDERATION ARE BASED ON THE VARIOUS CONCLUSIONS DRAWN BY ME WHICH HAVE BEEN DISCUSSED IN THE ABOVE PARAS. THEREFORE, THE AO WAS NOT JUSTIFIES IN MAKING ADDIT ION OF RS. 3,10,00,000/- BEING ON SHEER ASSENTING AND PRESUMPTION BASIS. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 103 THUS, THE ADDITION MADE BY THE AO AMOUNTING TO RS. 3,10,00,000/- IS DELETED. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. 86. IN THE GIVEN SET OF FACTS AND CIRCUMSTANCES OF THE CASE AND SETTLED JUDICIAL PRECEDENTS FOLLOWED BY LD.CIT(A), WE ARE OF THE VIEW THAT LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THIS DOCUMENT WAS NOT SUFFICIENT TO MAKE ADDITION FOR UNACCOUNTED INVESTM ENT, AGAINST THE ASSESSEE COMPANY. THUS NO INTERFERENCE IS CALLED FO R IN THE FINDING OF LD.CIT(A) .IN THE RESULT, REVENUES GROUND NO. 4 AND GROUND NO.3 FOR A.Y. 2011-12 AND A.Y. 2012-13 RESPECTIVEL Y ARE DISMISSED. 87. NOW WE TAKE UP COMMON GROUND NO. 5 FOR A.Y. 201 1-12 (RS. 3,16,00,000); AND GROUND NO. 5 (RS. 1,81,00,000) AN D GROUND NO. 6 (RS. 4,00,00,000) FOR A.Y. 2012-13 OF THE DEPARTM ENTS APPEAL. GROUND NO. 5 FOR A.Y. 2011-12 AND A.Y. 2012-13 RELA TE TO UNEXPLAINED INVESTMENT AS PER LPS 1/3 PG. 99 TO 103 FOUND FROM THE RESIDENCE OF SHRI YASHOVARDHAN JAIN, GENERAL MA NAGER FINANCE OF ASSESSEE COMPANY. FURTHER GROUND NO. 6 FOR A.Y. 2012-13 RELATE TO ALLEGED COMMISSION PAYMENT IN RESPECT TO THE SAM E LOOSE PAPER. SINCE ALL THESE ISSUES ARE INTERCONNECTED THESE GRO UNDS ARE ADJUDICATED TOGETHER. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 104 88. THE FACTS RELATING TO THESE GROUNDS OF APPEAL A RE THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION, AT THE RES IDENTIAL PREMISES OF SHRI YASHOVARDHAN JAIN, GENERAL MANAGER (FINANCE ) OF THE ASSESSEE COMPANY, COPY OF AGREEMENT DATED 09/02/201 2 WAS FOUND MARKED AS LPS 1/3 PAGE NO. 99 TO 103. THE SAID AGRE EMENT WAS DULY SIGNED AND ON STAMP PAPER FOR ASSIGNMENT OF RI GHTS TO PURCHASE 13.314 HECTARES (32.89 ACRES) OF LAND AT V ILLAGE PHANDA BETWEEN M/S. CITI INFRAVENTURE PVT. LTD. AND SHRI K UNAL AGRAWAL (ASSIGNER/ FIRST PARTY) AND M/S. AG8 VENTURES LTD. (ASSIGNEE/ SECOND PARTY). LD. AO STATED THAT AS PER ANNEXURE A OF THE AGREEMENT, THE TOTAL CONSIDERATION FOR THE LAND BET WEEN THE FIRST PARTY AND THE BHUMI SWAMIS WAS RS. 11,97,08,000 OUT OF WHICH RS. 2.30 CRORES HAD ALREADY BEEN PAID BY THE FIRST PARTY. THESE LAND WERE SOLD BY THE ASSIGNER UNDER THIS AGREEMENT TO A SSESSEE COMPANY FOR RS. 51.51 LAKHS PER ACRE TOTALLING TO R S. 16,94,16,000. THUS, AS PER THIS AGREEMENT, DIFFERENCE AMOUNT OF R S. 4,97,08,000 HAS TO BE PAID BY THE ASSESSEE COMPANY TO THE FIRST PARTY FOR THE SAID LAND. FURTHER, LD. AO REFERRED TO LPS 1/2 PAGE NO. 67 WHICH WAS LEDGER OF MUNNA AGRAWAL HIGHLAND LAND FOR T HE PERIOD IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 105 01.04.2011 TO 07.06.2013. THIS LEDGER ALLEGEDLY CON TAINED DATE WISE ENTRIES OF CASH PAYMENT TO MUNNA AGRAWAL AT RS. 1, 52,00,000 . FURTHER LPS 1/2 PAGE NO. 65 WAS LEDGER ACCOUNT OF P RADEEP AGRAWAL. AS PER THIS LEDGER CASH PAYMENT OF RS. 75, 00,000 WAS PAID TO HIM. LPS 1/2 PAGE 56 WAS ALSO REFFERED BY LD. A O. AS PER THIS LOOSE SHEET IT WAS MENTIONED MONTH WISE AMOUNT PAI D. TOTAL AMOUNT PAYABLE WAS RS. 225 + 470.03 = 695.03. MON TH-WOIE AMOUNT PAID FOR FEB 12 TO JUNE 13 WAS RS. 377.00 LA KHS. LD. AO FURTHER REFERRED TO LPS 1/2, PAGE 55 WHICH CONTAINE D DETAILS OF AGREEMENT REVISED AREA 31.20 ACRES DATED 07.06. 2013. LD. AO FURTHER REFERRED TO BS-1/2 PAGE NO. 7 WHICH WAS A P AGE OF DIARY ON WHICH CERTAIN HAND WRITTEN NOTINGS HAVE BEEN MADE. LD. AO THEREFORE ALLEGED THAT UNACCOUNTED PAYMENT WAS MADE BY THE ASSESSEE COMPANY TO M/S. CITI INFRAVENTURES PVT LTD . THROUGH THEIR DIRECTORS SHRI PRADEEP AGRAWAL AND TO SHRI KUNAL AG RAWAL. HE THEREFORE ADDED RS. 3,16,00,000 IN A.Y. 2011-12 AND RS. 1,81,00,000 IN A.Y. 2012-13. FURTHER, LD. AO NOTED THAT IN THE ANNEXURE A TO THE AGREEMENT, IT WAS MENTIONED THAT BOTH SIDE COMMISSION PAID BY AG8 (4 CRORES) FROM 1 FEB. 2012. AGREEMENT AMT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 106 (9 CRORE) INTT. WILL BE CHARGE 3% PER MONTH . LD. AO FURTHER ADDED COMMISSION RS. 4 CRORES ON THE BASIS OF SAID NOTING WHICH IS COVERED IN GROUND NO. 6 FOR A.Y. 2012-13. 89. AGAINST THE ADDITION OF UNACCOUNTED PAYMENT FOR PURCHASE OF LAND, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT( A) WHO DELETED THE ADDITION IN VIEW OF HIS FINDING AT PAGE 119 TO 134 OF THE IMPUGNED ORDER. 4.6.9 THIS IS AN UNDISPUTED FACT THAT NEITHER ANY INCRIMI NATING MATERIAL WAS FOUND OR SEIZED DURING SEARCH PROCEEDINGS NOR S HRI PRADEEP AGARWAL OR ANY OF THE FARMER/SELLER HAS EVER ADMITTED ABOUT PA YMENT OF RS. 4,97,00,000/- BY THE APPELLANT IN CASH. ON THE CONT RARY, NOT ONLY FROM THE FIVE FARMERS/BHUSWAMIS WHOSE NAMES AS MENTIONED ON PAGE NO 99 OF LPS- 1/3 BUT FROM VARIOUS OTHER FARMERS/BHUSWAMIS, APPEL LANT HAS DIRECTLY PURCHASE AGRICULTURAL LAND IN VILLAGE PHANDA KALAN, BHOPAL. THE PAYMENT MADE FOR PURCHASE OF LANDS ARE DULY RECORDED IN BOO KS OF ACCOUNT AND THROUGH CHEQUES. IN ABSENCE OF ANY CORROBORATIVE EV IDENCE TO PROVE THAT THERE WAS ANY EXCHANGE OF MONEY BY CASH, AO HAS NO LOCUS TO ASSUME THAT APPELLANT HAS PAID SUM OF RS. 4,97,00,000/- T O M/S CITI INFRAVENTURES P.LTD. IT IS SETTLED LAW THAT AO CANNOT MAKE ANY ADDITION MERELY ON BASIS OF SUSPICION, HOWEVER STRONG IT MAY BE. THE AO IS NOT JUSTIFIED IN PRESUMING CERTAIN FACTS WITHOUT HAVING ANYTHING TO CORROBORAT IVE. HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT C ANNOT BE MADE ON THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 107 BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HE LD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (954) 26 ITR 736 (SC). 4.610 IN VIEW OF THE ABOVE DISCUSSION, MATERIAL EVIDENCES ON RECORD AND CASE LAWS CITED, FIRSTLY, THE AO OUGHT TO HAVE PROV IDED OPPORTUNITY OF CROSS EXAMINATION OF SHRI YASHOVARDHAN JAIN. SECONDLY, TH E AO SHOULD HAVE EXAMINED SHRI PRADEEP AGARWAL AND SHRI MUNNA AGARWA L BEFORE MAKING ANY ADDITION TO THE INCOME OF THE APPELLANT. THIRDL Y, THE AO SHOULD HAVE BROUGH SOME INDEPENDENT EVIDENCE SUGGESTING EXCHANG E OF CASH OF RS. 4,97,00,000/-. FOURTHLY, THE IMPUBGED LOOSE PAPER 5 5, 56, 65 & 67 OF LPS- 1/3 WERE FOUND IN POSSESSION OF SHRI YASHOVARDHAN J AIN AND NOT IN POSSESSION OF APPELLANT. FIFTHLY, NONE OF THE LOOSE PAPER UNDER CONSIDERATION IS SIGNED BY THE APPELLANT OR ANY OF ITS AUTHORIZED REPRESENTATIVE. SIXTHLY, THE IMPUNGED LOOSE PAPER SHOULD BE SPEAKING ONE WIT HOUT HAVING ANY SECOND INTEREPRATION, WHICH IS NOT IN THE CASE OF A PPELLANT. SEVENTHLY, THE AO HAS ALSO RELIED UPON THE STATEMENT OF FARMERS/SE LLERS, WHO DURING APPELLANT PROCEEDINGS HAD FILED AFFIDAVITS STATING THAT NO CASH WAS RECEIVED FROM APPELLANT COMPANY AGAINST THE SALE OF THEIR LA ND. ONE OF THE SELLER HAS STATED THAT HE WAS UNDER PRESSURE AND THEREFORE, HA S ACCEPTED CASH RECEIPT OF RS. 5,00,000/- FROM APPELLANT BEFORE THE AO. MY FINDINGS ON THE ISSUE UNDER CONSIDERATION ARE BASED ON THE VARIOUS CONCLU SIONS DRAWN BY ME WHICH HAVE BEEN DISCUSSED IN THE ABOVE PARAS. THERE FORE, THE AO WAS NOT JUSTIFIES IN MAKING ADDITION OF RS. 3,16,00,000/- BEING ON SHEER ASSENTING AND PRESUMPTION BASIS. THUS, THE ADDITION MADE BY T HE AO AMOUNTING TO RS. 3,16,00,000/- IS DELETED. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 108 SIMILAR FINDINGS WERE GIVEN FOR DELETING THE ADDIT ION OF RS. 1,81,00,000 FOR A.Y. 2012-13. 90. IN RESPECT TO ADDITION OF RS. 4,00,00,000 ON AC COUNT OF COMMISSION PAYMENT, LD. CIT(A) DELETED THAT ADDITIO N AS PER PAGE 144 TO 150 OF HIS ORDER AS UNDER:- THE AO HAS MADE ALLEGATION AGAINST THE ASSESSEE TH AT THE HAS MADE PAYMENT OF RS. 5,96,000/- TOWARDS PART B AND SALARY OF DRIVE. IN ABSENCE OF ANY ADMISSION BY SHRI RAJEEV SONI OR ORDER DIRECTOR S OF APPELLANT COMPANY OR ANY INCRIMINATING DOCUMENT/PAPER TO ESTABLISH TH AT ASSESSEE HAS MADE PAYMENT OF RS. 5,96,000/- IT IS SETTLED LEGAL POSIT ION THAT ONUS OF PROOF IS ON THE PERSON WHO MAKES ANY ALLEGATION AND NOT ON THE PERSON WHO HAS TO DEFEND. AS PER LEGAL MAXIM AFFAIRMANTI NON NEGANTI INCUMBIT PROBATION MEANS BURDEN OF PROOF LIES UPON HIM WHO AFFIRM AND NOT UPON HIM WHO DENIES. SIMILARLY AS PER DOCTRINE OF COMMON LAW INCUMBIT PROBATION QUI DIGIT NON QUI NEGAT I.E. BURDEN LIES UPON ONE WHO ALLEGES AND NOT UPON ONE WHO DENY THE EXISTENCE OF THE FACT . IT IS IMPORTANT TO NOTE THAT SHRI RAJEEV SONI WAS APPOINTED DIRECTOR OF M/S AAKRITI DWELLING PVT. LTD. ON 28.06.2008 AND NOT ON 26.06.2008 AS ALLEGED BY THE AO. FURTHER, THE LOOSE PAPER I.E. PAGE NO 38 OF LPS-A-14 IS ROUG H WORKING/JOTTING. THE AO HAS FILED TO DISCHARGE HIS ONUS OF PROOF ESPECIALLY WHEN ADDITION HAS BEEN MADE UNDER DEEMING FICTION. IN VIEW OF THIS LACUN E ON THE PART OF AO, IMPUNGED ADDITION IS LEGALLY NOT SUSTAINABLE. AS HE LD IN THE CASE OF CIT V/S KP VARGHESE 131 ITR 574 (SC) BY HOBBLE APEX COURT IN ABSENCE OF EVIDENCE THAT ACTUALLY ASSESSEE PAID MORE AMOUNT TH AN DECLARED IN IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 109 REGARDED DEED, NO ADDITION CAN BE MADE. IN THE CASE OF BANSAL STRIPS (P) LTD. & ORS VS. ACIT (2006) 99 ITD 177 (DEL) IT HAS BEEN HELD THAT:- IF AN INCOME NOT ADMITTED BY ASSESSEE IS TO BE ASS ESSEE IN THE HANDS OF THE ASSESSEE. THE BURDEN TO ESTABLISH THE SUCH INCOME I S CHARGEABLE TO TAX IS ON THE AO. IN THE ABSENCE OF ADEQUATE MATERIAL AS TO N ATURE AND OWNERSHIP OF THE TRANSACTIONS, UNDISCLOSED INCOME CANNOT BE ASSE SSED IN THE HANDS OF THE ASSESSEE MERELY BY ARITHMETICALLY TOTALLY VARIO US FIGURES JOTTED DOWN ON LOOSED DOCUMENTS. 4.7.5 THIS IS AN UNDISPUTED FACT THAT NEITHER ANY INCRIM INATING MATERIAL WAS FOUND OR SEIZED DURING SEARCH PROCEEDINGS NOR T HE PAYER HAS EVER ADMITTED ABOUT PAYMENT OF RS. 5,96,000/-. IN ABSENC E OF ANY CORROBORATIVE EVIDENCE TO PROVE THAT THERE WAS EXCHANGE OF MONEY BY CASH/CHEQUES/KIND, AO HAS NO LOCUS TO ASSUME THAT A PPELLANT HAS PAID RS. 5,96,000/-. IT IS SETTLE LAW THAT AO CONNOT MAKE ANY ADDITION M ERELY ON BASIS OF SUSPICION, HOWEVER STONG IT MAY BE. THE AO IS NOT J USTIFIED IN PRESUMING CERTAIN FACTS WITHOUT HAVING ANYTHING TO CORROBORAT IVE. HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT C ANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HE LD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (954) 26 ITR 736 (SC). 4.7.6 IN VIEW OF THE ABOVE DISCUSSION, MATERIAL EVIDENCES ON RECORD AND CASE LAWS CITED, FIRSTLY, THE AO OUGHT TO HAVE PROV IDED COMPLETED DETAILS OF BENEFICIARIES WHO HAS RECEIVED COMMISSION OF RS. 4, 00,00,000/- FROM APPELLANT. SECONDLY, THE AO SHOULD HAVE DONE INDEPE NDENT ENQUIRY REGARDING THE IMPUNGED TRANSACTION. THIRDLY, NO COR ROBORATIVE EVIDENCE WAS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 110 FOUND DURING SERACH SUGGESTING PAYMENT OF COMMISSIO N OF RS. 4,00,00,000/- BY THE APPELLANT. FOURTHLY, THE NOTHI NG/SCRIBBLING ON LOOSE PAPER SHOULD BE A SPEAKING ONE HAVING DIRECT NEXUS WITH THE ASSESSEE AND TRANSACTION MENTIONED THEREIN, WHICH WAS NOT IN THE CASE OF APPELLANT. FIFTHLY, THE AO BEING OF CONSIDERED OPINON THAT CAS H RS. 4,00,00,000/- WAS PAID BY THE APPELLANT COMPANY TOWARD COMMISSION FOR PURCHASING LANDS, SHOULD HAVE REJECTED BOOKS OF ACCOUNT OF THE APPELL ANT WHICH WAS ALSO NOT DONE. SIXTHLY, THE AO FAILED TO BRING ON RECORD VIT AL DETAILS SUCH AS DATE OF PAYMENT, NAME OF BENEFICIARY. COMMISSION PAID AGAIN ST WHICH LAND, MODE OF PAYMENT OF COMMISSION ETC. MY FINDINGS ON THE I SSUE UNDER CONSIDERATION ARE BASED ON THE VARIOUS CONCLUSIONS DRAWN BY ME WH ICH HAVE BEEN DISCUSSED IN THE ABOVE PARAS. THEREFORE, THE AO WAS NOT JUSTIFIES IN MAKING ADDITION OF RS. 4,00,00,000/- BEING ON SHEER ASSENTING AND PRESUMPTION BASIS. THUS, THE ADDITION MADE BY THE AO AMOUNTING TO RS. 4,00,00,000/- IS DELETED. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. 91. AGAINST THESE FINDING, THE REVENUE IS IN APPEAL . LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT DURING T HE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF SHRI YASHOVAR DHAN JAIN, GENERAL MANAGER (FINANCE) OF THE ASSESSEE-COMPANY A DOCUMENT ON STAMP PAPER WAS FOUND, WHICH WAS DULY SIGNED BY THE PARTIES. AS PER ANNEXURE A OF THE DOCUMENT, IT WAS CLEAR THAT T HE ASSESSEE COMPANY PURCHASED 32.89 ACRES OF LAND @ 51.51 LAC/ ACRE FROM M/S. CITI INFRA VENTURES LTD. THE AMOUNT PAYABLE TO THE FARMERS WAS RS. 11,97,08,000 AND THEREFORE EXCESS AMOUNT OF RS. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 111 4,97,00,000 WAS PAID IN EXCESS BY THE ASSESSEE-COMP ANY. FURTHER, HE REFERRED TO LPS 1/2 PAGE NO. 55, 56, 65, AND 67 AND FURTHER BS- 1/2 PAGE NO. 7 AND CONTENDED THAT THE DOCUMENTS FUR THER GAVE THE DETAILS OF PAYMENTS MADE TO SHRI MUNNA AGRAWAL ALIA S SHRI PRADEEP AGRAWAL, AND SHRI KBL AGRAWAL. HE THEREFORE SUBMIT TED THAT SUFFICIENT EVIDENCES WERE FOUND DURING THE COURSE O F SEARCH TO ESTABLISH THE PAYMENT OF RS. 4.97 CRORES AS ON-MONE Y TO M/S. CITI INFRAVENTURES PVT LTD. IN RESPECT OF COMMISSION PAY MENT , HE FURTHER REFERRED TO ANNEXURE A OF THE AGREEMENT AND SUBMITTED THAT THE FACT OF COMMISSION PAYMENT OF RS. 4 CRORES WAS CLEARLY MENTIONED IN THE AGREEMENT. HE THEREFORE SUBMITTED THAT THE ORDER OF THE LD. AO MAY KINDLY BE RESTORED AND ADDITION S O MADE MAY BE CONFIRMED. 92. PER CONTRA LD. COUNSEL FOR THE ASSESSEE, ON THE CONTRARY, SUBMITTED THAT THE IMPUNGED MOU CONTAINS DETAILS OF AGREEMENT SIGNED BETWEEN M/S CITY INFRAVENTURES PVT. LTD. AND AG8 VENTURES LIMITED ON 09.02.2012 FOR ASSIGNING RIGHTS TO PURCH ASE 13.314 HECTARE (32.89 ACRES) OF LAND AT VILLAGE PHANDA KAL AN, BHOPAL. ACCORDING TO THE AGREEMENT THE TOTAL CONSIDERATION TO BE PAID BY THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 112 M/S CITY INFRAVENTURES P LTD. TO THE FARMERS/BHUSWA MIS WAS RS. 11,97,08,000/- OUT OF WHICH SUM OF RS. 2.30 CRORES HAVE ALREADY BEEN PAID. THE AGREED SALE RATE FOR THE ASSESSEE CO MPANY WAS FINALISED AT RS. 51.51 LACS PER ACRES AND THE TOTAL COST FOR THE ASSESSEE COMPANY WOULD COME OUT AT RS. 16,94,16,000 /-. HE SUBMITTED THAT ALTHOUGH, THE ASSESSEE WANTED TO ACQ UIRE THE LAND FOR ITS PROJECT AND THEREFORE ENTERED INTO AN AGREE MENT WITH M/S. CITI INFRAVENTURES LTD, YET LATER THE LAND WAS PURC HASE DIRECTLY FROM DIFFERENT FARMERS SUBSEQUENTLY. THEREFORE, THIS AGR EEMENT WAS LATER NOT REGISTERED. THE FARMERS WERE EXAMINED ON OATH A ND THEY ACCEPTED THAT THE TRANSACTION WAS DONE WITH ASSESSE E COMPANY. FURTHER STATEMENT OF SHRI PRADEEP AGRAWAL AND SHRI KUNJ BIHARI LAL AGRAWAL OF M/S. CITI INFRAVENTURES LTD. WAS ALSO RE CORDED BY THE LD. AO. IN THEIR STATEMENT ALSO, THEY ACCEPTED THAT THI S TRANSACTION WAS DIRECTLY DONE BY ASSESSEE-COMPANY WITH THE FARMERS. FURTHER IN RESPECT OF THE ALLEGATION OF RECEIVED ON CERTAIN AM OUNT IN CASH BY THE FARMERS, LD. COUNSEL FOR THE ASSESSEE TRIED TO SUMMARISE THE ALLEGEATION OF CASH RECEIVED IN THE FOLLOWING CHART :- IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 113 NAME OF FARMER KHASARA NO AND DETAILS OF LAND/AREA DATE OF REGISTRY SALE CONSIDERATION SUMMARY OF STATEMENT RECORDED SHRI DEEP SINGH S/O LATE SHRI GURUBK SINGH 346/1 & 348 7.10 ACRES 16.02.201 2 (PB 867- 877) 2,43,44,000 1. ON 05.02.2016 RECIVED CASH OF RS. 10 LAC. (PB 880-885) 2. ON 08.02.2016 NO CASH RECEIVED (PB 886- 888) 3. ON 12.02.2016 NO CASH RECEIVED (PB 889- 891) 4. ON 26.02.2016 SHRI DINESH S/O DEEP SINGH THAT CASH OF RS. 3,64,000/- WAS RECEIVED.(PB 892-894) AFFIDAVIT PB 879 NO CASH RECEIVED - SMT. HARKUWAR BAI W/O SHRI GURUBAKSH - SHRI BHAGWAN SINGH S/O SHRI GURUBAKSH - SMT SORAM BAI AND SMT - SUGAN BAI D/O GURUBAKSH 359 & 350/2 6.52 ACRES 16.06.201 2 (PB 924- 948) 1,66,72,000 1. ON 04.02.2016 & 08.02.2016 NO CASH RECEIVED. (PB 949-966) 2. AFFIDAVIT FROM BHAGWAN SINGH AND SORAM BAI (PB.967-968) THAT NO CASH RECEIVED FROM SALE OF LAND. SHRI SURESH S/O SHRI RAM SINGH 362/21 3 ACRES 01.11.201 2 1,20,00,000 1. ON 05.02.2016 THAT NO CASH RECEIVED. (PB 1025- IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 114 (PB 1004- 1024) 1029) 2. AFFIDAVIT PB 1030 , NO CASH RECEIVED. SHRI RAJMAL S/O SHRI SHAMBHULAL 362/1/2/ & 375 6 ACRES 24.05.201 2 (PB 898- 919) 1,90,00,000 NO RECORDED. SHRI GOVIND SINGH S/O SHRI SHAMBHULAL 362/1/1 4.38 ACRES 13.09.201 2 (PB 973- 993) 1,75,20,000 1.ON 28.04.2014 NO CASH RECEIVED. 2. ON 26.02.2016 STATED THAT CASH OF RS. 5 LAC RECEIVED. (PB 999) 2. AFFIDAVIT ON 11.05.2018 THAT NO CASH WAS RECEIVED. (PB 994) LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NONE OF THE SELLERS ACCEPTED TO HAVE RECEIVED ANY AMOUNT IN CASH. IN RE SPECT OF TWO SELLERS, WHO HAD ACCEPTED TO HAVE RECEIVED CASH, TH EY SUBSEQUENTLY FILED AFFIDAVIT STATING THAT NO SUCH CASH WAS RECEI VED. FURTHER, IN RESPECT OF THE ALLEGATION REGARDING PAYMENTS TO SHR I KBL AGARWAL AGAINST PURCHASE OF LAND AT VILLAGE PHANDA, BHOPAL, LD. COUNSEL REFERRED TO THE COPY OF LEDGER ACCOUNT OF SHRI KUNJ BEHARI LAL AGARWAL AND COPY OF REGISTERED DEED FOR LAND AT VIL LAGE PHANDA, BHOPAL. HE SUBMITTED THAT ASSESSEE COMPANY PURCHASE D 9 ACRES OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 115 LAND FROM SHRI KBL AGARWAL FOR A TOTAL SALE CONSIDE RATION OF RS. 3,67,59,000/-. ALL THE PAYMENTS WERE MADE THROUGH D IFFERENT CHEQUES. THIS TRANSACTION WAS RECORDED IN BOOKS. TH IS TRANSACTION WAS DIFFERENT. FURTHER, REFERRING TO LPS 1/2 PAGE NOS. 55, 56, 65 & 67 IT WAS SUBMITTED THAT THE MAKER OF THESE DOCUMEN TS WAS NOT KNOWN. IT WAS NOT ENQUIRED AS TO WHO HAD WRITTEN IT . THE SAME WERE EVEN NOT FOUND FROM THE PREMISES OF ASSESSEE COMPAN Y. FURTHER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO COMM ISSION AS MENTIONED IN THE ANNEXURE A WAS PAID. IT WAS UNKNOW N AS TO WHO WROTE IT, AND WHY SUCH SCRUBBLING WAS MADE. FURTHER , LD. AO DID NOT ENQUIRE AS TO WHEN SUCH COMMISSION, IF ANY WAS PAID, AND TO WHOM SUCH COMMISSION WAS MADE. MERELY ON A ROUGH SC RUBBLING THIS ADDITION OF HUGE AMOUNT OF RS. 4 CRORES WAS MA DE. LD. COUNSEL THEREFORE RELIED ON THE ORDER OF LD. CIT(A) AND CON TENDED THAT THE SAME MAY BE CONFIRMED. 93. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, EVIDE NCES ON RECORD AND THE ORDERS OF THE LD. LOWER AUTHORITIES. WE FIN D THAT ASSESSEE COMPANY ENTERED INTO AN AGREEMENT WITH M/S. CITI IN FRAVENTURES LTD. FOR PURCHASE OF LAND. THE LAND WAS TO BE PURCH ASED FOR RS. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 116 16,94,16,000/-. AS PER THIS AGREEMENT, M/S. CITI IN FRAVENTURES LTD. HAD ALREADY ENTERED INTO AN AGREEMENT WITH THE FARM ERS FOR PURCHASE OF THE LAND FOR RS. 11,97,08,000/- OF WHIC H RS. 2.30 CRORES WERE PAID TO THE FARMERS. LD. AO THEREFORE A LLEGED THAT THE DIFFERENCE BETWEEN RS. 16,94,16,000 LESS RS. 11,97, 08,000 I.E. RS. 4,97,08,000 WAS ON-MONEY PAID BY THE ASSESSEE COMPA NY. LD. AO RELIED ON VARIOUS DOCUMENTS TO CORROBORATE HIS CONC LUSION THAT ON- MONEY WAS PAID. HOWEVER, WHEN ENQUIRED FROM THE FAR MERS, THEY STATED THAT THE LAND WAS DIRECTLY SOLD TO THE ASSES SEE COMPANY. THE SALE DEEDS ALSO STATE THAT THE SALE WAS DIRECTLY BY THOSE FARMERS TO THE ASSESSEE COMPANY. LEDGER ACCOUNTS OF THE FARMER S HAVE BEEN FILED, WHEREBY PAYMENTS HAVE BEEN MADE BY THE ASSES SEE COMPANY TO THE FARMERS. EVEN SHRI PRADEEP AGRAWAL AND SHRI KBL AGRAWAL WERE ENQUIRED AND BOTH ACCEPTED THAT THE LAND DEAL WAS DIRECTLY DONE BY THE ASSESSEE COMPANY WITH THE FARMERS. THE BASIS OF THE LD. AO IN THE PRESENT CASE REMAINS THE AGREEMENT WH ICH IS ON STAMP PAPER AND DULY SIGNED BY THE PARTIES. HOWEVER , IN OUR HUMBLE OPINION, THIS AGREEMENT WAS NEVER EXECUTED. ALL THE PARTIES DENIED THE TRANSACTION AS PER THE AGREEMENT. THE SA LE DEEDS AND IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 117 OTHER EVIDENCES PROVE THE CONTRARY. HAD THE PARTIES INTENDED TO EXECUTE THIS AGREEMENT, IT WOULD HAVE BEEN REGISTER ED. SO FAR AS THE EVIDENCE REGARDING THE PAYMENT TO KBL AGRAWAL IS C ONCERNED, THE ASSESSEE ACCEPTED PAYMENT TO KBL AGRAWAL, BUT IN R ESPECT OF PURCHASE OF ANOTHER LAND. FURTHER, THE DEPARTMENT I S CONTENDING THAT PAYMENT TO MUNNA AGRAWAL IS PAYMENT TO PRADEEP AGRAWAL. NO EVIDENCE HAS BEEN PRODUCE TO ESTABLISH THAT MUNNA AGRAWAL IS THE ALIAS NAME OF PRADEEP AGRAWAL. INFACT THIS FACT WA S DENIED BY PRADEEP AGRAWAL IN HIS STATEMENT. IN RESPECT OF ON- MONEY RECEIVED BY THE FARMERS, THE FARMERS HAVE ALREADY DENIED TO HAVE RECEIVE ON- MONEY. IN RESPECT OF SHRI DEEP SINGH, HIS STATEMENT WAS RECORDED ON MULTIPLE OCCASIONS. ON 05.02.2016, HE STATED THA T HE RECEIVED ON MONEY OF RS. 10 LAKHS. FURTHER, ON 08.02.2016 AN D 12.02.2016 HE STATED THAT NO CASH WAS RECEIVED. LATER, IN HIS STATEMENT ON 26.02.2016, HE STATED ON MONEY OF RS. 3,64,000 RECE IVED. HE FURTHER DENIED THE SAME BY FILING AFFIDAVIT. HOW HI S STATEMENT CAN BE RELIED. IN RESPECT OF SMT. KARKUWAR BAI AND OTHE RS. STATEMENT WERE RECORDED ON 04.02.2015 AND 08.02.2016, WHEREBY THE SELLERS DENIED ON-MONEY; AND FURTHER REAFFIRMED THE FACT BY FILING AFFIDAVIT. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 118 IN RESPECT OF SHRI SURESH, HE DENIED ON MONEY RECEI PT AND THEREAFTER REAFFIRMED THE FACT IN AFFIDAVIT. ALSO, IN RESPECT OF SHRI RAJMAL, HIS STATEMENT WAS NOT RECORDED. LASTLY, IN RESPECT OF SHRI GOVIND SINGH, HIS STATEMENT WAS RECORDED ON TWO OCC ASIONS. ON 28.04.2014, HE DENIED TO HAVE RECEIVED ON-MONEY. LA TER, ON 26.02.2016, HE ACCEPTED RECEIPT OF ON-MONEY OF RS. 5 LAKHS. HOWEVER, SUBSEQUENTLY, HE RETRACTED RECEIPT OF ON-M OENY BY FILING AFFIDAVIT. IN THESE CIRCUMSTANCES, ALL THE SELLERS HAVE EITHER NOT ACCEPTED TO HAVE RECEIVED ANY ON-MONEY OR THE SAME WAS LATER RETRACTED. IN THESE GIVEN FACTS AND CIRCUMSTANCE WE DO NOT FIND ANY INFIRMITY IN THE FINDING OF LD. CIT(A) ON THE ISSUE UNDER CONSIDERATION DELETING THE ADDITION OF RS.3,16,00,0 00/- AND RS.1,81,00,000/- AND THE SAME STANDS CONFIRMED. 94. FURTHER, IN RESPECT OF COMMISSION, SINCE AT THE FIRST INSTANCE WE HAVE HELD THAT THE AGREEMENT WAS NOT ACTED UPON, THEREFORE THE COMMISSION MENTIONED THEREIN CANNOT BE SAID TO HAVE BEEN PAID. ALSO, THE NOTINGS IN THE AGREEMENT ARE MERE ROUGH S CRUBBINGS. WHO WROTE IT, AND COMMISSION, IF ANY, WAS PAID TO WHOM WAS NEVER IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 119 ENQUIRED UPON. WE THEREFORE CONFIRM THE ORDER OF LD . CIT(A) ON THIS GROUND ALSO. 95. IN THE RESULT GROUND NO. 5 FOR A.Y. 2011-12 (RS . 3,16,00,000); AND GROUND NO. 5 (RS. 1,81,00,000) AND GROUND NO. 6 (RS. 4,00,00,000) FOR A.Y. 2012-13 OF THE DEPARTMENTS A PPEAL ARE HEREBY DISMISSED. 96. NOW WE MOVE TO GROUND NO. 7 OF THE DEPARTMENTS APPEAL FOR A.Y. 2011-12, WHICH RELATES TO ADDITION OF RS. 30,0 0,000 IN RESPECT OF LPS A-13 RELATING TO ON-MONEY IN RESPECT OF 21 R EGISTRIES FOUND FROM THE OFFICE ASSESSEE-COMPANY AND 6 REGISTRIES F OUND FROM THE SITE OFFICE OF AAKRITI AQUA CITY. 97. THE FACTS RELATING TO THIS IS GROUND ARE THAT O UT OF THE TOTAL 27 REGISTRIES FOUND, ONE REGISTRY IN RESPECT OF PURCHA SE OF LAND FROM SHRI NARAYAN SINGH AND SHRI JAIRAM SINGH WAS FOUND. THE ASSESSEE HAD PURCHASED 10.70 ACRES OF LAND ON 29.10 .2010 FOR A TOTAL SALE CONSIDERATION OF RS. 6,33,18,000 FROM SH RI NARAYAN SINGH AND SHRI JAIRAM SINGH. DURING THE POST SEARCH INQUI RIES, STATEMENT U/S. 131 WAS RECORDED OF BOTH SHRI NARAYAN SINGH AN D SHRI JAIRAM SINGH IN MAY 2014. IN THEIR STATEMENT, THEY STATED THAT THEY HAVE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 120 RECEIVED RS. 15 LAKHS EACH OVER AND ABOVE THE RECOR DED CONSIDERATION. THUS TOTAL AMOUNT OF RS. 30 LAKHS WA S HELD BY THE LD. AO TO BE ON-MONEY PAYMENT BY THE ASSESSEE. 98. AGAINST THIS ADDITION, THE ASSESSEE PREFERRED A N APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) AT PAGE NO. 158 PARA 4.8.5 ONWARDS OF HIS ORDER DELETED THE ADDITION AS UNDER: 4.8.5 DUE CONSIDERATION IS GIVEN TO THE SUBMISSION FILED BY THE APPELLANT INTER ALIA THE EVIDENCE FURNISHED. LET ME FIRST SUM MARISE THE BASIS ON WHICH ADDITIONS HAVE BEEN MADE BY THE ASSESSING OFFICER. THE AO HAS SOLELY RELIED UPON STATEMENT RECORDED OF SELLERS SHRI NARA YN SINGH AND SHRI JAI RAM SINGH. THE ADDITION MADE BY THE AO ARE PURELY H YPOTHETICAL AND WITHOUT ANY INDEPENDENT CORROBORATIVE EVIDENCE. THE AO HAS CONSISTENTLY HARPED ON THE STATEMENTS OF SELLERS. THIS IS AN ADMITTED FACT THAT STATEMENTS OF 21 WER E RECORDED. THIS IS ALSO AN ADMITTED FACT THESE STATEMENTS WERE RECORDED BEHIND THE BACK OF APPELLANT. NO OPPORTUNITY OF CROSS-EXAMINATION WAS ALLOWED TO THE ASSESSEE THOUGH SPECIFICALLY ASKED FOR THE ASSESSEE. IT HAS BEEN HE LD BY HONBLE HIGH COURT IN THE CASE OF DCIT V/S MAHENDRA AMBBALAL PATEL & CIT V/S KANTILALBHAI RAVIDAS PATEL THAT STATEMENT HAS NO EVIDENTIARY VALUE IF OPPORTUNITY OF CROSS-EXAMINATION IS NOT ALLOWED. BE SIDES THIS, APPARENTLY THE AO DID NOT INDEPENDENTLY VERIFIED THE FACTS ABO UT THE GENUINENESS OF THE SAID PARTY AS WELL AS THE IMPUNGED PURCHASE TRANSAC TION. IT IS NOT UNDERSTANDABLE AS TO HOW INDEPENDENTLY AND IMPARTIA LLY, THE AO COULD REACH TO THE FINAL CONCLUSION THAT ON MONEY AMOUNTI NG TOTALING TO RS. 30,00,000/- WAS PAID FOR PURCHASED OF LAND FROM DIF FERENT SELLERS WITHOUT EVEN BRINGING A SINGLE IOTA OF POSITIVE EVIDENCE ON RECORD EXCEPT THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 121 STATEMENT OF FARMERS WHICH WAS ALSO RECORDED BEHIND THE BACK OF ASSESSEE. HENCE, THE ADDITION MADE BY THE AO WAS BASED ON MER E GUESS WORK, CONJUCTURES AND SURMISES, WHICH HAS NO PLACE IN TAX JURISPRUDENCE. IN SUM & SUBSTANCE, ACTION OF THE AO IS NEITHER SUSTAINABL E ON FACTS NOR IN LAW, BEING BASED ON STATEMENT OF SELLERS. 4.8.7 IT IS A SETTLED LEGAL PRINCIPAL THAT ADDITION CANNO T BE SIMPLY MADE ON THE BASIS OF THIRD PARTY STATEMENT AND WITHOUT GIVI NG ANY OPPORTUNITY OF CROSS EXAMINATION. THE FOLLOWING JUDICIAL PRONOUNCE MENT SUPPORTS THE CASE OF APPELLANT. CIT V. J.M.D. COMMUNICATIONS P. LTD (2010) 320 ITR 17 (ST) (SC) (ITA NO 106 OF 2007 DT 16-1-2009(DELHI)(HC). PERSON WHO HAS ISSUED THE BILLS HAS GIVEN THE STATE MENT THAT HE WAS CARRYING ON THE BUSINESS OF ISSUING BOGUS ACCOMMODA TION BILLS ON COMMISSION BASIS WITH THE ASSESSEE, AND THIS WAS NO T PUT TO THE ASSESSEE FOR REBUTTAL OR CROSS-EXAMINATION, HIGH CO URT HELD NO SUBSTANTIAL QUESTION OF LAW. ON SLP BY REVENUE THE COURT HELD THAT IT THE AO WANTS TO USE SOME STATEMENT MADE BEFORE HIM, THE N ON REQUEST BY THE ASSESSEE, IS BOUND TO PUT THE DEPONENT FOR CROS S EXAMINATION. KISHINCHAND CHELLARAM V. CIT (1980) 125 ITR 713 (SC ) THOUGH THE PROCEEDINGS UNDER THE INCOME TAX ACT ARE NOT GOVERNED BY THE STRICT RULES OF EVIDENCE, THE DEPARTMENT IS SHOULD TO AFFORD AN OPPORTUNITY TO CONTROVERT AND CROSS EXAMINE ON WHICH THE DEPART MENT PLACES ITS RELIANCE. OPPORTUNITY OF CROSS EXAMINATION MUST BE GIVEN. THE CONSEQUENCE OF BREACH OF NATURAL JUSTICE IS THAT EI THER THE ADDITION IS VOID OR MATTER MAY HAVE TO BE TO BE REMANDED TO LOWER AU THORITIES. HONBLE DELHI HIGH COURT IN THE CASE OF BASUDEV GAR G VS. COMMISSIONER OF CUSTOMS. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ASH WANI GUPTA, 322 ITR 396 (DEL) IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 122 HONBLE ITAT, DELHI IN THE CASE OF DCIT VS. HEMINDE R KUMAR IN ITA NO. 4210-4213/DEL/2013 DATE OF ORDER 29.08.2014. HONBLE RAJASTHAN HIGH COURT IN THE CASE OF COMMIS SIONER OF INCOME- TAX-I, JAIPUR VS. A.L. LALPURIA CONSTRUACTION (P) L TD. HONBLE CALCUTTA HIGH COURT IN THE CASE OF COMMISSI ONER OF INCOME-TAX VS. EASTERN COMMERCIAL ENTERPRISES (1994) 210 ITR 1 03 (CAL.)(HC) COMMISSIONER OF INCOME-TAX VS. SURISE TOOLING SYSTE M (P) LTD. [2014] 47 TAXMANN 20 (DELHI HIGH COURT)- WHERE ASSESSING OFFICER MADE ADDITION TO ASSESSEE S INCOME ON BASIS OF STATEMENT RECORDED BY DIRECTOR COMPANY IN COURSE OF SURVEY TO EFFECT THAT SAID AMOUNT REPRESENTED NON-EXISTENT TRANSACTION, S INCE STATEMENT SO MADE DID NOT HAVE ANY EVIDENTIARY VALUE AND, MOREOV ER, ASSESSING OFFICER HAD NOT EVEN REJECTED ASSESSEES BOOKS OF A CCOUNT WHILE TREATING TRANSACTION IN QUESTION TO BE BOGUS, IMPUGNED ADDIT ION DESERVED TO BE DELETED HONBLE GUJARAT HIGH COURT IN THE CASE OF PR. COMM. OF INCOME TAX I VS. CHARTERED SPEED PVT. LTD. AND ALSO HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. INDRAJIT SINGH SURI (2 013) 33 TAXMANN 281 (GUJ.)- WHERE ADDITIONS WERE MAD ON BASIS OF STATEMENT OF PERSONS WHO WERE NOT ALLOWED TO BE CROSS EXAMINED BY ASSESSEE, ADDITIONS WERE NOT SUSTAINABLE. RADHA MADHAV IND. (P) LTD. VS. COMMISSIONER OF CENT RAL EXCISE, RAIPUR (2015) 54 TAXMANN 404 (NEW DELHI CESTAT)- NON-SUPPLY OF DOCUMENTS AND NOT ALLOWING CROSS-EXA MINATION OF SAID WITNESSES WOULD VIOLATE PRINCIPLES OF NATURAL JUSTI CE CIT V. EASTERN COMMERCIAL ENTERPRISES (1994) 210 I TR 103 (CAL.) (HC)- IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 123 THE ASSESSEE IN ENTITLED TO CROSS-EXAMINE THE PERSON WHO WAS EXAMINED BY THE A.O. CROSS- EXAMINATION IS THE SINE QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST A PARTY UNLESS THE PARTY IS PUT ON NOTICE O F THE CASE MADE OUT AGAINST HIM. HE MUST BE SUPPLIES THE CONTENTS OF AL L SUCH EVIDENCE BOTH ORAL AND DOCUMENTARY, SO THAT HE CAN PREPARE TO MEE T THE CASE AGAINST HIM. DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE DCIT VS. MEHENDRA AMBALAL PATEL TAX WHEREIN THE HONBLE HIGH COURT HELD AS UNDER: THOUGH THE AO HAS PLACED RELIANCE UPON THE STATEME NTS OF SHRI MONOJ VADODARIA AND SHRI G.C. PATEL FOR THE PURPOSE OF TA XING THE AMOUNT IN THE HANDS OF THE ASSESSEE, DESPITE REQUEST BEING MADE BY THE ASSESSEE FOR CROSS-EXAMINING BOTH THE SAID PERSONS, THE AO HAS N OT PERMITTED THE ASSESSEE TO CROSS-EXAMINING THEM. IN THE CIRCUMSTAN CES, NO RELIANCE COULD BE PLACED UPON THE STATEMENTS OF THE SAID PER SONS AS THE RESPONDENT ASSESSEE HAD NO OPPORTUNITY TO CROSS-EXA MINE THEM. THE STATEMENTS MADE BY THE AFORESAID PERSONS WOULD HAVE NO EVIDENTIARY VALUE AND AS SUCH, WOULD NOT BE ADMISSIBLE IN EVIDE NCE. DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE CIT VS. KANTIBHAI REVIDAS PATEL TAX WHEREIN IT WAS HELD AS UNDER: THE LD. AO HAD USED THIS STATEMENT WITHOUT ALLOWIN G CROSS EXAMINATION OF VIKAS A. SHAH WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 4.8.8 THE AO FURTHER PRESUMED THAT APPELLANT HAS PAID CO NSIDERATION OVER AND ABOVE THE REGISTERED VALUE. HONBLE RAJASTHAN H IGH COURT IN THE CASE OF CIT VS. BHANWARLAL MORWATIYA (2008) 215 CTR 489 (RA J) HAS HELD AS UNDER:- APART FROM THE FACT, THAT EVEN IF, IT WERE TO BE A SSUMED THAT THE PRICE OF THE LAND WAS DIFFERENT THAN THE ONE RECITED IN THE SALE DEED UNLESS IT IS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 124 ESTABLISHED ON RECORD BY THE DEPARTMENT, THAT AS A MATTER OF FACT THE CONSIDERATION AS ALLEGED BY THE DEPARTMENT DID PASS TO THE SELLER FROM THE PURCHASE IT CANNOT BE SAID THAT THE DEPARTMENT HAD ANY RIGHT TO MAKE AN ADDITION. IF THE CASE OF THE APPELLANT STANDS IN A MUCH BETTER FOOTING IN AS MUCH AS THERE IS NO IOTA EVIDENCE FOUND IN COURSE O F SEARCH THAT THE APPELLANT HAD PAID MORE MONEY THAN WHAT WAS STATED IN THE PURCHASE DOCUMENT. IN THE CASE OF THE APPELLANT THE EXERCISE CARRIED OUT BY THE ASSESSING OFFICER IS WITHOUT THE AUTHORITY OF LAW A ND THEREFORE THE SAME CANNOT BE A BASIS FOR ADDITION. HONBLE BOMBAY HIGH COURT IN THE CASE OF MRS. NIRM AL LAXMINARAYAN GROVER V. APPROPRIATE AUTHORITY, 223 ITR 572. THE RELEVANT PORTION OF THE JUDGMENT IS EXTRACTED BELOW: HOWEVER, AS REGARDS THE CONTENTION RAISED ON BEHA LF OF THE PETITIONER THAT THE MARKET RATE FIXED FOR THE AREA IN QUESTION AT T HE RELEVANT TIME IN THE LAND RATES FIXED BY THE NAGPUR MUNICIPAL CORPORATION, NA GPUR, AS WELL AS BY THE STAMP AUTHORITY FOR THE PURPOSES OF LEVY OF STAMP D UTY ON REGISTRATION OF THE DOCUMENTS WAS RS. 1,500 PER SQ. METER, I.E., RS. 14 5 PER SQ. FT. AND THEREFORE, THE RATE OF RS. 225 PER SQ. FT. AGREED T O BETWEEN THE PARTIES FOR PURCHASE OF THE SUIT LAND WAS MORE THAN THE MARKET RATE FOR SUCH LAND, IT MAY BE SEEN THAT THE RATES OF PROPERTIES MAINTAINED BY THE ABOVE AUTHORITY OR OFFICERS FOR THE PURPOSES OF CHECKING EVASION TO STAMP DUTY UPON TRANSFER DEEDS ARE NOT PURSUANT TO THE PROVISION IN ANY STAT UTE, RELATING EVEN TO STAMP DUTY. AT ANY RATE IT CANNOT BE A BASIS FOR DE TERMINATION OF THE MARKET VALUE FOR ACQUISITION OF FOR COMPULSORY PURCHASE OF ANY LAND WHERE THE USUAL TEST IS OF A PRUDENT BUYER AND A PRUDENT SELLER DET ERMINED BY THE EVIDENCE OF SALE TRANSACTION, IF AVAILABLE IN THE VICINITY, OF THE LAND IN QUESTION WHOSE MARKET RATE IS TO BE DETERMINED POSSESSING THE SAME OR MORE OR LESS SIMILAR ADVANTAGEOUS FEATURES. THIS IS THE VIEW TAKEN BY TH E SUPREME COURT IN THE CASE OF JAWAJEE NAGNATHAM V. THE REVENUE DEVISIONAL OFFICER [1994] 2 JT (SC) 604; AIR 1994 SCW 2852. THE SUBMISSION ON BEHA LF OF THE PETITIONERS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 125 BASED UPON THE RATES OF PROPERTIES MAINTAINED BY TH E SATED GOVERNMENT FOR THE PURPOSES OF CHECKING EVASION OF STAMP DUTY ON T RANSFER DEEDS CANNOT, THEREFORE BE ACCEPTED. 4.8.9 IN VIEW OF THE ABOVE, FIRSTLY, THE AO OUGHT TO HAVE GIVEN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT. SECONDLY, TH E AO SHOULD HAVE BROUGHT EVIDENCE HAVING DIRECT NEXUS WITH THE ALLEGED ON MO NEY PAYMENT OF RS. 30,00,000/-. THIRDLY, THE ADDITIONS MADE BY THE AO ARE ON ASSUMPTION AND PRESUMPTION BASIS. FOURTHLY, THE LOOSE PAPERS WERE FOUND IN POSSESSION OF SHRI YASHOVARDHAN JAIN AND NOT FROM APPELLANT. FIFT HLY, THE STATEMENTS WERE RECORDED BY THE THEN ADIT WHO WAS NOT APPROPRI ATE JURISDICTIONAL OFFICER. MY FINDINGS ARE BASED ON THE FINDINGS GIVE N IN ABOVE MENTIONED PARAS. THUS, KEEPING IN VIEW THE ABOVE DISCUSSION A ND JUDICIOUSLY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F KRISHINCHAND CHELLARAM (SUPRA), THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 30,00,000/-. THUS, ADDITION MADE BY THE AO AMOUNTIN G TO RS. 30,00,000/- IS DELETED BEING ON THE BASIS OF STATEMENT RECORDED BEHIND TH E BACK OF APPELLANT AND NO MEANINGFUL OPPORTUNITY OF CROSS EX AMINATION WAS PROVIDED. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. 99. AGAINST THIS ORDER OF THE LD. CIT(A), THE DEPAR TMENT IS IN APPEAL. LD. COUNSEL FOR THE REVENUE, DURING THE COU RSE OF HEARING, SUBMITTED THAT THE LD. AO WAS JUSTIFIED IN MAKING T HE ADDITION. HE REFERRED TO THE STATEMENTS OF SHRI NARAYAN SINGH AN D SHRI JAIRAM SINGH AND CONTENDED THAT THE ORDER OF LD. CIT(A) MA Y BE SET-ASIDE AND THE ADDITION MADE BY THE LD. AO MAY BE RESTORED . 100. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT ASSESSEE HAD PURCHASED THE LAND FOR RS. 6,33,18,000 FROM SHRI IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 126 NARAYAN SINGH AND SHRI JAIRAM SINGH. THE PURCHASE W AS DULY RECORDED IN THE BOOKS OF THE ASSESSEE. ALL THE PAYM ENTS WERE MADE BY CHEQUE. NO EVIDENCE WAS FOUND DURING THE SEARCH SHOWING ANY ON-MONEY. IN THE POST SEARCH INQUIRIES, THE SELLER, SHRI NARAYAN SINGH AND SHRI JAIRAM SINGH, FOR REASONS BEST KNOWN TO THEM STATED THAT ON MONEY WAS PAID RS. 30,00,000. THIS S TATEMENT WAS NOT CORROBORATED BY BRINGING ANY MATERIAL ON RECORD . FURTHER, LD. AO DID NOT GRANT OPPORTUNITY OF CROSS-EXAMINATION O F THESE PERSONS. HE THEREFORE CONTENDED THAT THE MERE STATEMENT OF T HIRD PERSONS, THEREFORE, CANNOT BE RELIED ON FOR MAKING THE ADDIT ION. 101. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, THE ORDER OF THE LD. LOWER AUTHORITIES AND THE EVIDENCES ON RECORD. WE F IND THAT LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. AT T HE FIRST INSTANCE, NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. THE ADDITION IN SEARCH CASES, SHALL BE LIMITED TO INCRI MINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE TRANSACTION FOR PURCHASE OF LAND WAS DULY RECORDED IN THE BOOKS. IT WAS ONLY IN THE STATEMENT RECORDED LATER ON, AFTER THE SEARCH, THE FACT OF ON -MONEY WAS STATED. SECONDLY, CROSS-EXAMINATION OF THE SELLERS WAS NOT GRANTED BY THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 127 LD. AO. THE STATEMENT OF THE SELLERS CANNOT BE RELI ED AS CROSS- EXAMINATION WAS NOT GRANTED. THIRDLY, THERE IS NO C ORROBORATIVE MATERIAL, BROUGHT ON RECORD, EXCEPT THE STATEMENT O F THE SELLERS. IN THESE CIRCUMSTANCES, WE FIND MERIT IN THE FINDING O F LD CIT(A) WHICH IS DULY SUPPORTED BY VARIOUS DECISION SQUARELY APPL ICABLE ON THE INSTANT ISSUE AND THUS HOLD THAT THE ADDITION CANNO T BE SUSTAINED. THIS GROUND NO. 7 OF THE DEPARTMENTS APPEAL FOR A .Y. 2011-12 IS THEREFORE DISMISSED. 102. NOW WE TAKEUP COMMON GROUNDS RELATING TO DISA LLOWANCE OF EXPENDITURE COVERED IN GROUND NO. 8 OF A.Y. 2011-12 , GROUND NO. 10 OF A.Y. 2012-13, GROUND NO. 12 OF A.Y. 2013-14 A MOUNTING TO RS. 79,22,875; RS. 70,08,192; AND RS. 6,39,49,728 R ESPECTIVELY. 103. THE FACTS RELATING TO THESE GROUNDS OF APPEAL ARE THAT THE ASSESSEE COMPANY HAD BOOKED EXPENDITURE TOWARDS PUR CHASE OF SAND, BUILDING MATERIAL AND FOR CERTAIN JOB WORKS F ROM M/S. MAA MAHIMA TRADERS, M/S. S.K. CONTRACTORS AND M/S. LAKE CITY SUPPLIERS P LTD. THE EXPENDITURE WERE DONE DURING T HE A.Y. 2011- 12 TO A.Y. 2013-14. THE DETAILS OF EXPENDITURE DONE PARTY-WISE WERE AS UNDER:- IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 128 NAME & ADDRESS OF PARTY A.Y 2011-12 A.Y 2012-13 A.Y 2013-14 LAKE CITY SUPPLIERS PVT LTD, FLAMINGO 21, AAKRITI ECO CITY, BHOPAL 0 0 60,083,427 MAA MAHIMA TRADERS, C - 171, RAJAT VIHAR, HOSHANGABAD ROAD, BHOPAL 39,33,900 70,08 ,192 38,66,301 S.K. CONTRACTOR, E - 6 - J - 222, ASHA NIKETAN, ARERA COLONY, BHOPAL 39,88,975 0 0 YEAR WISE TOTAL 79,22,875 70,08,192 6,39,49,728 104. LD. AO REFERRED TO THE POST SEARCH INQUIRIES C ONDUCTED AGAINST THE AFORESAID PARTIES AND CONCLUDED THAT THE WHEREA BOUTS OF THESE PARTIES COULD NOT BE ASCERTAINED. IN RESPECT OF M/S . LAKECITY SUPPLIERS PVT LTD., LD. AO STATED THAT IT IS A NON- DESCRIPT ENTITY, AND HAD NO REAL ECONOMIC EXISTENCE. IN THE ASSESSME NT ORDER, LD. AO REFERRED TO THE VISIT BY INSPECTOR AND HE STATED THAT AS PER THE INSPECTORS REPORT, NO SUCH PARTY WAS FOUND AT THE ADDRESS OF THE AFORESAID PARTY. THE NEIGHBOURS INFORMED THAT, PREM ISES WAS ON RENT AND IT WAS INFORMED THAT A FAMILY RESIDES AT T HE PREMISES. ALSO, LD. AO REFERRED TO THE STATEMENT OF SHRI VERGHESE J OSEPH, OWNER OF THE PREMISES, TO CONTEND THAT THE SAME WAS NOT GIVE N ON RENT TO M/S. LAKE CITY SUPPLIERS PVT LTD. IN RESPECT OF M/S . MAA MAHIMA TRADERS, BHOPAL, LD. AO REFERRED TO INSPECTORS REPO RT AND IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 129 CONTENDED THAT NO SUCH PARTY RESIDED AT THE GIVEN A DDRESS. INSTEAD THE HOUSE WAS RESIDENTIAL HOUSE AND IT WAS LOCKED E VERYTIME INSPECTOR VISITED. AS ENQUIRED FROM THE NEIGHBOURS, SOME STUDENTS RESIDED THERE ON RENT, AND THEY USED TO COME DURING LATE EVENING AND LEAVE THE PREMISES EARLY IN THE MORNING. LASTLY , IN RESPECT OF M/S. S.K. CONTRATOR, BHOPAL, LD AO AGAIN REFERRED T O INSPECTORS REPORT AND STATED THAT NO SUCH PARTY RESIDED AT THE ADDRESS. THE PREMISES WAS OCCUPIED BY ONE FAMILY FOR LAST 7-8 YE ARS. THE STATEMENT OF OWNER OF THE PREMISES SMT. MALTI GAUR WAS ALSO RECORDED, AND DENIED TO HAVE KNOWN M/S. S.K. CONTRA CTORS. LD. AO THEREFORE MADE THE ADDITION TREATING THE EXPENDITUR E AS BOGUS. 105. AGAINST THIS ADDITION, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDIT ION AT PAGE NOS. 169 TO 171 OF HIS ORDER, HOLDING AS UNDER: 4.9.5 I HAVE CONSIDERED THE FACTS OF THE CASE, VARIOUS CA SE, LAW REPLIED UPON BY THE APPELLANT AND FINDINGS OF THE AO. THE A PPELLANT DURING THE YEAR FY 2010-11 HAS PURCHASED SEND MATERIAL OF RS. 39,33 ,900/- FROM M/S MAA MAHIMA TRADERS AND PLASTER WORK WAS DONE BY M/S SK CONTRACTOR OF RS. 39,88,975/-. THE AO DURING ASSESSMENT PROCEEDINGS D EPUTED INSPECTOR OF INCOME TAX IN ORDER TO UNEARTHING CORRECT FACTS REG ARDING THAT TRANSACTION MADE WITH THESE PARTIES. THE INSPECTOR OF INCOME TA X VISITED THE ADDRESS OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 130 THESE PARTIES AS PROVIDED BY THE APPELLANT, HOWEVER , WAS NOT ABLE TO TRACE EITHER OF THEM. THEREFORE THE AO REQUIRED ASSESSEE TO EXPLAIN THE TRANSACTION AND PRODUCE THESE SELLERS FOR EXAMINATION ON OATH. THE AO HAS ALLEGED THAT APPELLANT FAILED TO PROVE GENUINENESS AS WELL AS DU RING APPELLANT PROCEEDINGS HAS FILED COPIES OF BILLS AND VOUCHERS, SUPPORTING LEDGER ACCOUNT, PART BANK ACCOUNT STATEMENT OF THESE PARTI ES, PAN NO, TIN NO, TDS CERTIFICATE, NAME AND ADDRESS AND MOBILE NO OF THES E PARTIES. 4.9.6 IT IS IMPORTANT TO MENTION HERE THAT THE AO IN PARA 25.6 (I) OF ASSESSMENT ORDER HAS STATED THAT NONE OF THE THREE PARTIES HAVE RESPONDED TO THE SUMMONS ISSUED BY THIS OFFICE FOR VERIFICATI ON OF THE TRANSACTION WITH THE ASSESSEE COMPANY. THIS STATEMENT OF AO PRIME-F ACIA SHOWS THAT THE SUMMONS WERE SERVED UPON THESE PARTIES, HOWEVER, TH EY DELIBERATELY DID NOT RESPONDED FOR WHATEVER REASON. THUS, THE AO HAS CONTINUOUSLY HARPED UPON THE FACT THAT THE ASSESSEE FAILED TO PRODUCE T HE IMPUGNED PARTIES FOR EXAMINATION ON OATH. HONBLE SUPREME COURT IN THE C ASE OF LIC OF INDIA V/S CIT (1996) 216 ITR 410 (SC) HAS HELD THAT THE LAW DOES NOT COMPEL A MAN TO PERFORM. IN THE PRESENT CASE, IT WAS IMPOSSIBLE FOR ASSESSEE TO PRODUCE THE PARTIES WHO ARE NOT WILLING TO APPEAR BEFORE TH E AO. LAW DOES NOT EXPECT A MAN TO DO IMPOSSIBLE. I FIND IT SUITABLE AND APPR OPRIATE TO QUOTE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NI KUNJ EXIRNP ENTERPRIESES (P) LTD. [2013] 216 TAXMAN 171 (BOM.) WHICH IS VERY SIMILAR TO THE CASE OF APPELLANT WHEREIN IT HAS HELD THAT WHER E SALES SUPPORTED THE PURCHASES AND PAYMENT WAS MADE THROUGH BANKS, MEREL Y BECAUSE SUPPLIERS HAS NOT APPEARED BEFORE AO, THE PURCHASE COULD NOT BE TREATED AS BOGUS. 4.9.7 NEVERTHELESS, THE AO HAS GROSSLY ERRED IN MAKING AD DITION SIMPLY OF THE BASIS OF GUESS WORK, ASSUMPTION AND PRESUMPTION . IT IS WELL SETTLED THAT NO DISALLOWANCE CAN BE MADE AS A LEAP IN THE DARK. THE AO IS NOT ENTITLED TO MAKE A GUESS WITHOUT EVIDENCE. THE ASSESSMENT OF AN Y PARTICULAR YEAR CANNOT BE BASED ON MERE SUSPICION OR BARE GUESS, BU T ON A LEGITIMATE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 131 MATERIAL FROM WHICH A REASONABLE INFERENCE OF ANY E XPENDITURE BEING OF THE DISALLOWABLE NATURE COULD BE DRAWN AND THAT THE INI TIAL BURNED OF FINDING SUCH MATERIAL IS ON THE AO AS HELD BY HONBLE HIGH COURT ORISSA IN THE CASE OF BANSIDHAR ONKARMALL VS. CIT (1953) 23 ITR 353 (O RISSA). HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSES SMENT CANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEE N HELD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (1954) 26 ITR 736 (SC). ALSO, ONCE THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVING THAT THE PARTIES UNDER CONSIDERATION ARE GENUINE, NOW THE BALL LIES IN THE COURT OF AO TO PROVE THAT THE CLAIM OF APPEL LANT IS FALSE AND INCORRECT. FURTHER, THE AO HAS NEITHER DONE ANY INDEPENDENT EN QUIRY EVEN WHEN PAN NO, TIN NO, BANK ACCOUNT STATEMENT OF THESE PARTIES WERE PROVIDED TO AO. THUS, IN VIEW OF THE ABOVE, THE AO WAS NOT JUSTIFIE D IN DISALLOWING PAYMENTS TO VARIOUS PARTIES SIMPLY ON THE BASIS OF ASSUMPTION, PRESUMPTION AND SURMISE BASIS. THE AO OUGHT TO HAVE BROUGHT ON RECORD ANY CLINCHING EVIDENCE WHICH COULD PROVE THAT THE PAYMENTS WERE B ROUGHT ON RECORD MADE AGAINST BOUGH BILLS AND VOUCHERS. THUS, KEEPING IN VIEW THE VARIOUS CASE LAWS CITED ABOVE, THE ADDITION MADE BY THE AO AMOUN TING TO RS. 79,22,875/- IS DELETED. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. SIMILAR FINDINGS WERE GIVEN IN A.Y. 2012-13 AND A. Y. 2013-14. 106. AGAINST THESE FINDINGS OF THE LD. CIT(A), THE DEPARTMENT IS IN APPEAL. LD. COUNSEL FOR THE REVENUE REFERRED TO THE ASSESSMENT ORDER AND SUBMITTED THAT DETAILED INQUIRIES HAVE BE EN DONE BY THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 132 LD. AO. THE REPORTS OF THE INSPECTOR AND THE STATEM ENT OF THE OWNER OF THE PREMISES CLEARLY ESTABLISH THAT THE PARTIES ARE NON-EXISTING. THE ADDITION MADE BY THE LD. AO MAY THEREFORE BE CO NFIRMED. 107. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A). HE CONTENDED THAT THE PURC HASES FROM THE PARTIES WERE DULY VERIFIABLE. HE SUBMITTED THE FOLL OWING CHART. M/S. MAA MAHIMA TRADERS PROP: TULARAM CHOUHAN C-171,RAJAT VIHAR, HOSHANAGABAD ROAD, BHOPAL CONTACT NO. 9630707251 ,998103138 PAN: -AIHPC0618D TIN - 23273606568 M/S. S.K. CONTRACTOR PROP: ZAKIR HUSSAIN E-6, J-298, ASHA NIKETAN , ARERA COLONY, BHOPAL CONTACT NO. 9507516087 PAN : - AAUPH9884R TIN - 23924008615 LAKE CITY SUPPLIERS PVT. LTD FLAMINGO-21, AAKRITI ECO CITY, BHOPL. R.N. SAHU & PRAVEEN MISRA CONTACT NO. PANO.AACCL2144H TIN. 23839046908 PURCHASE OF 50% SHARES OF THE COMPANY IS PROVED BY SEIZED PAPER NATURE OF TRANSACTION SAND SUPPLIER PLASTER WORK AND OTHER JOB WORK. BUI LDING MATERIAL SUPPLIER (MAINLY IRON & CEMENT) ASSMT. YEAR 2011-12 2012-13 2013-14 2011-12 2012-1 3 2013-14 2011-12 2012-13 2013-14 ADDITION 3933900 7008192 3866301 3988975 - - - - 6 0083427 TDS DEDUCTED TDS NOT APPLICABLE 11474 TDS CERTIFICATE AND COPIES OF A/C OF S.K. CONTRACTOR IN THE BOOKS OF THE APPELLANT FOR A.YRS.2011-12 TO 2013-14 ARE ENCLOSED. EVIDENCES TO PROVE TRANSACTION PB 1060-1154 PB 1155-1196 PB 1444-1509 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRA NSACTIONS WITH THE ABOVE PARTIES WERE DULY RECORDED IN THE BOOKS. THE PAYMENTS WERE MADE BY CHEQUES. THE SAME WERE DULY REFLECTED IN THE BANK IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 133 ACCOUNTS OF THE ASSESSEE AND ALSO IN THE BANK ACCOU NTS OF THOSE PARTIES. HE STATED THAT FOR THE EXPENDITURE, THE AS SESSEE HAD GIVEN FOLLOWING EVIDENCES: (A) ADDRESS (AS AVAILABLE WITH ASSESSEE) (B) PAN (ALL WERE INCOME-TAX ASSESSEES AND THEIR AD DRESS ON RECORD OF INCOME-TAX DEPARTMENT WAS SAME) (C) TELEPHONE NOS. (D) NATURE OF EXPENDITURE (E) VAT REGISTRATION NO. (F) PAYMENTS WERE SUBJECTED TO TDS (G) ALL PAYMENTS WERE THROUGH BANKING CHANNELS. (H) TDS CERTIFICATES (I) BANK ACCOUNTS OF PARTIES AND OF ASSESSEE. (J) LEDGER OF ASSESSEE IN THEIR BOOKS AND CROSS-ACC OUNTS. HE FURTHER SUBMITTED THAT LD. AOS RELIANCE ON THE INSPECTORS REPORT AND THE STATEMENT U/S. 131 IS BAD IN LAW, AS THE SAME WERE NEVER BROUGHT ON RECORD. COPY OF THE SAME WERE NOT PROVIDED AND NO OPPORTUNITY OF CROSS-EXAMINATION WAS GRANTED. HE THEREFORE, SUBMITTED THAT THESE EVIDENCES CANNOT BE RELIED ON. HE FURTHER REFERRED TO THE STATEMENT OF SHRI HEMANT SONI, CMD OF THE COMPANY, AS RECORDED DURING SEARCH, AND LATER THE A FFIDAVIT FILED BY HIM AND CONTENDED THAT IT HAS BEEN SUBMITTED TIME A ND AGAIN THAT THE EXPENDITURE IS GENUINE. HE FURTHER SUBMITTED TH AT THE FACT THAT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 134 CONSTRUCTION WAS DONE, HAS BEEN VERIFIED AND ACCEPT ED BY THE DEPARTMENT DURING SEARCH AND NO DISCREPANCY HAS BEE N FOUND IN THE SAME. HE THEREFORE SUBMITTED THAT THESE GROUNDS OF THE DEPARTMENT MAY BE DISMISSED. 108. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, ARG UMENTS OF THE PARTIES AND THE ORDER OF THE LD. LOWER AUTHORITIES. ISSUE OF DISALLOWANCE OF EXPENDITURE DELETED BY LD.CIT(A) IS FOR ADJUDICATION BEFORE US. AT THE FIRST INSTANCE, THE PRIMARY EVIDE NCES IN SUPPORT OF THE TRANSACTIONS IN THE FORM OF PAN AND TIN OF THE PARTIES WERE AVAILABLE, BANK STATEMENTS, BILLS ETC WERE ON RECOR D AND THESE TRANSACTIONS WERE ALREADY RECORDED IN THE BOOKS, BE FORE THE SEARCH WAS CONDUCTED. NO EVIDENCE WHATSOEVER HAS EVER BEEN STATED BY THE DEPARTMENT TO HAVE BEEN FOUND OUT DURING THE COURSE OF SEARCH TO SHOW THAT THE EXPENDITURE WAS BOGUS. SECONDLY, LD. AO REFERRED TO THE REPORT OF THE INSPECTOR DURING THE ASSESSMENT. HOWEVER, THE SAID INSPECTORS REPORT WAS NEVER BROUGHT ON RECORD . EVEN IN THE DEPARTMENTS PAPER BOOK BEFORE US, THE SAME HAS NO T BEEN FILED. IF SUCH REPORT IS AVAILABLE, WHY THE DEPARTMENT HAS NE VER BROUGHT THE SAME ON RECORD. SIMILARLY, THE STATEMENT RECORDED O N OATH OF SHRI IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 135 VERGHESE JOSEPH AND SMT. MALTI GAUR HAS NEVER BEEN BROUGHT ON RECORD. IN THE ABSENCE OF THE SAME, THE RELIANCE OF THE DEPARTMENT ON THESE EVIDENCE IS UNCALLED FOR. IF THE DEPARTMEN T INTENDED TO USE ANY EVIDENCE AGAINST THE ASSESSEE, IT WAS INCUMBENT ON THE DEPARTMENT TO PROVIDE THE COPY OF THE SAME TO THE A SSESSEE AND ALLOW ASSESSEE TO REBUT THE SAME. THE LD AO FAILED TO DO SO. THUS, THESE EVIDENCES CANNOT BE USED AGAINST THE ASSESSEE . THIRDLY, WE NOTICE THAT A SEARCH WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE. NO DISCREPANCY WAS FOUND IN THE WORK DONE. RATHER T HE DEPARTMENT GOT THE VALUATION DONE BY THE REGISTERED VALUER AND LATER BY THE DVO. THE DEPARTMENT ON ONE HAND CONTENDED THAT WOR K DONE WAS MORE AS DISCLOSED IN THE BOOKS; BUT ON THE OTHER HA ND, THEY ARE DOUBTING THE EXPENDITURE TOWARDS WORK DONE. THE STA ND OF THE DEPARTMENT IS CONTRADICTORY AND INCONSISTENT. WE TH EREFORE IN ABSENCE OF ANY CONCRETE EVIDENCE PLACED BEFORE US T HE REVENUE AUTHORITIES AND ALSO SINCE LEARNED DEPARTMENTAL REP RESENTATIVE BEING UNABLE TO DISPROVE THE EVIDENCES FILED BY THE ASSESSEE TO SUPPORT OF GENUINENESS OF EXPENDITURE, FIND NO MER ITS IN THE ACTION OF LD AO MAKING DISALLOWANCE OF EXPENDITURE. THUS N O INTERFERENCE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 136 IS CALLED FOR IN THE FINDING OF LD.CIT(A) . IN THE RESULT, GROUND NO. 8 FOR A.Y. 2011-12; GROUND NO. 10 FOR A.Y. 2012-13; A ND GROUND NO. 12 FOR A.Y. 2013-14 OF THE REVENUES APPEALS ARE DI SMISSED. 109. THE NEXT COMMON GROUND OF THE REVENUE, GROUND NO. 9 FOR A.Y. 2011-12 AND GROUND NO. 12 FOR A.Y. 2012-13 REL ATES TO ADDITION FOR ON-MONEY RECEIVED ON HIGHLAND PROJEC T, AMOUNTING TO RS. 1,56,43,283 AND RS. 2,67,71,771 RESPECTIVELY. 110. THE FACTS LEADING TO THIS GROUND OF APPEAL ARE THAT DURING THE COURSE OF SEARCH, CERTAIN DISCREPENCIES WERE NOTICE D IN THE TRANSACTIONS RELATING TO HIGHLAND PROJECT OF THE AS SESSEE. WHEN CONFRONTED, MD OF THE ASSESSEE COMPANY SHRI HEMANT SONI IN THE STATEMENT U/S 132(4), ADMITTED THAT COMPANY HAS REC EIVED 5-10% ON MONEY ON SALE OF PLOTS OF HIGHLAND PROJECT. THE RELEVANT QUESTION IS AS UNDER: Q30. ! ON MONEY (ON ACCOUNTED RECEIPT) ' # $ %&' ( % ) * + ' $,-$ .!#' / % %&' * * 0 1 RESIDENTIAL %&' 2! / 0 +3 .!#' #456* +3 ! SUPPORTED $7 CUSTOMERS ! * 8 - ' 0 ,$ /& ! % $ %&' * 9* $% ON MONEY :$ % %$ %& ' 2 9;<$ %= &5 ' <- %&' IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 137 >* : 2! !* ? <- % % %&' & % ' /%$ % 8 @ ' 9 * 9 * ? 9 .!#' +3 ! SUPPORTED %&' * ' 9* $% ON MONEY % $ %&' & % /%$ % 8 @ 9 %= &5 9 : ( ' 8 - AB5 ) .!; * +% 0 $ )C * ON MONEY :$ %$ ' $) ' D %$ %& E *F* % 5% * 10% +/ % / % 5% * 10% : 9 !G$.! H+; 8 I %$ %& BASED ON THIS CATEGORICAL ADMISSION AND THE DISCREP ENCIES FOUND DURING THE COURSE OF SEARCH, LD. AO ADDED 10% OF TH E TOTAL SALE PROCEEDS OF HIGHLAND PROCEEDS OF HIGHLAND PROJECT A S ON-MONEY RECEIPTS. THE ADDITION, INTER-ALIA WAS MADE AS UNDE R: - A.Y TOTAL SALES VALUE OF PLOTS OF HIGHLAND PROJECT ON-MONEY @ 10% OF SALES 2011 - 12 15,64,32,831 1,56,43,283 2012 - 13 26,77,17,714 2,67,71,771 111. AGAINST, THIS ADDITION, AN APPEAL WAS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A). THE ASSESSEE CONTENDED THAT, IN THE HIGHLAND PROJECT, THERE WERE SALE OF LAND AS WELL AS SALE OF CONSTRUCTED PROPERTIES. THE CATEGORICAL STATEMENT DURING SEARCH STATED ONLY ABOUT THE ON-MONEY IN RESPECT OF SALE OF LAND. DU RING THE A.Y. 2011-12 AND A.Y. 2012-13, THERE WAS NO SALE OF LAND IN THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 138 HIGHLAND PROJECT. CONSIDERING THE SAME, THE LD. CIT (A) DELETED THE ADDITION HOLDING AS UNDER:- 4.10.2 I HAVE CONSIDERATION THE FACTS OF THE CASE, WRITTEN SUBMISSION FILED BY THE APPELLANT AND FINDING OF THE AO. DURING THE COURSE OF SEARCH STATEMENT OF SHRI HEMANT SONI WAS RECORDED ON OATH WHEREIN HE HAS STATED THAT ON MONEY OF 5-10% WAS RECEIVED ON SALE OF PLOTS OF PROJECT HIGHLAND. THE RELEVANT EXTRACT OF STATEMENT OF SHRI HEMANT SO NI IS AS UNDER:- FROM THE ABOVE THE ABOVE STATEMENT IT IS VERY CLEA R THAT SHRI HEMANT SONI HAS ONLY ADMITTED ON MONEY ON SALE OF PLOTS AND NOT FOR SALE OF FLATS/DUPLEX OF PROJECT HIGHLAND. HOWEVER, THE AO ERRED IN PRESU MING THAT ON MONEY @ 10% HAS BEEN RECEIVED ON ENTIRE PROJECT. NOW THE MA IN QUESTION WHICH ARISE FROM THE ABOVE FINDING IS THAT WHETHER ANY PLOT WAS SOLD IN FY 2010-11 RELEVANT AY 2011-12 IN PROJECT HIGH LAND. IN THIS R EGARD , APPELLANT WAS REQUIRED TO FILE CHART SHOWING SALE OF PLOTS OF PRO JECT HIGHLAND. APPELLANT IN COMPLIANCE HAS FILED CHART SHOWING SALE OF PLOTS OF PROJECT HIGHLAND ALONG WITH AFFIDAVIT OF SHRI HEMANT SONI. THE DETAILS FIL ED BY THE APPELLANT ARE AS UNDER:- A.Y. TOTAL SALES OF PLOTS OF HIGHLAND PEROJECT AS PER APPELLANT ON-MONEY @ 7.5% ON SALE OF PLOTS AS PER APPELLANT ONMONEY RECD @ 7.5% AS PER APPELLANT ( SIC PROFIT ON SAME @ 5%) 2011-12 NIL 0 0 2012-13 NIL 0 0 2013-14 434081000 32556075 1627804 THUS, FROM THE ABOVE IT IS VERY CRYSTAL CLEAR THAT APPELLANT COMPANY HAS NOT SOLD ANY PLOT IN AY 2011-12, THEREFORE, NO ON MONEY WOUL D HAVE BEEN RECEIVED BY THE APPELLANT IN AY 2011-12. FURTHER THE ADDITION MADE BY THE AO WAS ON IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 139 PRESUMPTION BASIS BECAUSE ONCE THE ASSESSEE HAS CLE ARLY NARRATED IN HIS STATEMENT GIVEN ON OATH THAT HE HAS RECEIVED ON MON EY ON SALE OF PROJECT THEN THE AO HAS NO LOCUS TO ASSUME THAT ON MONEY WAS REC EIVED ON ENTIRE PROJECT. IN VIEW OF THE ABOVE DISCUSSION, THE AO WAS NO JUSTIFI ED IN MAKING ADDITION SIMPLY ON GUESS WORK AND PRESUMPTION. IT IS SETTLED LEGAL PRINCIPAL THAT PRESUMPTION HOW STRONG MAY CANNOT TAKE PLACE OF EVIDENCE. THUS, THE ADDITION MADE BY THE AO AMOUNTING RS. 1,56,43,283/- IS DELETED, FIRSTLY, ON ACCOUNT THAT NO PLOT WAS SOLD BY THE APPELLANT COMPANY DURING THE YEAR U NDER CONSIDERATION AND SECONDLY THAT THE ADDITION WERE MADE ON PRESUMPTION BASIS. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED . 112. AGAINST THIS, THE REVENUE IS IN APPEAL. THE LD . CIT(DR) RELIED ON THE ORDER OF THE LD. AO AND CONTENDED THAT THE S AME MAY BE CONFIRMED. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THERE WAS NO EVIDENCE EXCEPT THE STA TEMENT OF SHRI HEMANT SONI. NO MATERIAL HAS BEEN BROUGHT ON RECORD . HE INTER- ALIA, CONTENDED THAT THE CATEGORICAL STATEMENT WAS MADE WHEREBY IT WAS STATED THAT ON-MONEY WAS RECEIVED ON THE SALE O F LAND IN THE HIGHLAND PROJECT. SINCE NO LAND WAS SOLD IN THE HIG HLAND PROJECT DURING THE YEAR, NO ADDITION IS CALLED FOR IN ANY C ASE. 113. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND T HE FACTS ON RECORD. ON A PLAIN READING OF THE STATEMENT AS REPR ODUCED ABOVE, IT IS VERY CLEAR THAT THE ACCEPTANCE IN ANY CASE, WAS ONLY IN RESPECT OF ON-MONEY RECEIVED IN RESPECT OF THE SALE OF LAND ON THE HIGHLAND IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 140 PROJECT. IT IS UNCONTROVERTED FACT, THAT NO SALE OF LAND TOOK PLACE DURING THE A.Y. 2011-12 AND A.Y. 2012-13. THUS, THE RE EXISTS NO BASIS FOR ASSESSING ON-MONEY DURING THE CURRENT YEA RS. WE THEREFORE CONFIRM THE ORDER OF LD. CIT(A) AND DISMI SS THE GROUND NO. 9 FOR A.Y. 2011-12 AND GROUND NO. 12 FOR A.Y. 2 012-13 OF THE REVENUES APPEAL. 114. THE NEXT GROUND IS GROUND NO. 2 OF THE DEPART MENTS APPEAL FOR A.Y. 2012-13 RELATING TO ADDITION ON ACCOUNT OF UNACCOUNTED RECEIPTS LPS A-2 OF RS. 68,50,000. 115. THE FACTS RELATING TO THIS GROUND OF APPEAL AR E THAT CERTAIN LOOSE PAPERS MARKED AS LPS A-2 WERE FOUND DURING TH E COURSE OF SEARCH FROM THE OFFICE PREMISES OF THE ASSESSEE COM PANY. THESE LOOSE PAPERS PURPORTEDLY COVERED DETAILS OF AMOUNT RECEIVED FROM THE CUSTOMERS AGAINST THE SALE OF UNITS TO THEM. IN THESE LOOSE SHEETS, CERTAIN AMOUNTS WERE MENTIONED TO BE RECEIV ED IN CASH. ON VERIFICATION FOR THE SAME WITH THE BOOKS OF ACCOUNT S, LD. AO NOTICED THAT THE CASH RECEIPTS WERE NOT RECORDED IN THE BOO KS. HE THEREFORE ADDED THE CASH RECEIPTS FROM THE CUSTOMERS. IN THE CURRENT YEAR, LD. AO ADDED AMOUNT AS UNDER: IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 141 SL. NO. NAME OF CUSTOMER CASH TRANSACTION DATE OF TRANSACTION LPS/ PAGE NO. 1. SHALINI JAIN 4,00,000/ - 29.03.2012 A - 2/33 2. SMT. NIRMALA CHANDRA 20,00,000/ - 30.09.2011 A - 2/21 3. SMT. SADHANA TIWARI 16,00,000/ - 4,00,000/- 3,50,000/- TOTAL: 23,50,000/- 02.09.2011 09.09.2011 21.09.2011 A - 2/17 4. SHRI VINOD SEMWAL & ARCHANA SEMWAL 4,00,000/ - 3,00,000/- 6,00,000/- 5,00,000/- 3,00,000/- TOTAL RS. 21,00,000 15.09.2011 19.09.2011 29.09.2011 30.09.2011 24.03.2012 A - 2/13 116. AGAINST THIS ADDITION, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER CONSIDE RING THE EVIDENCES AND THE LAW, DELETED THE ADDITION ON PAGE 90 TO 101 , HOLDING AS UNDER: THE AO HAS MADE ALLEGATION AGAINST THE ASSESSEE THA T THE HAS RECEIVED THAT HE HAS RECEIVED RS. 68,50,000/- FROM VARIOUS CUSTOMER AS MENTIONED ON LOOSE PAPERS 13,17,21 & 33 OF LPS-A-2 IN CASH. IN A BSENCE OF ANY ADMISSION BY EITHER OF THE CUSTOMER/PAYER OR ANY INCRIMINATIN G DOCUMENTS/PAPER TO ESTABLISH THAT ASSESSEE HAS RECEIVED SUM OF RS. 68, 50,000/-. THE ASSESSEE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 142 HAS FILED COPY OF LEDGER LEDGER ACCOUNT OF THESE CU STOMER WHEREIN IT IS SEEN THAT APPELLANTS HAS RECEIVED ADVANCE FROM SMT NIRMA LA CHNADRA, SMT SADHANA TIWARI SHRI VINOD SEMWAL & SEMWAL OF RS. 50 ,000/- EACH THROUGH CHEQUE AND THE SAME HAS BEEN RETURNED THROUGH CHEQU E ONLYT. THE ADVANCE RECEIVED FROM SMT. SHALINI JAIN OF RS. 28,00,000/- IS STILL OUTSTANDING IN BOOKS OF ACCOUNT. THUS, THE ONLY INFERENCE WHICH CA N BE DRAWN FROM THIS IS THAT THE SEIZED LOOSE PAPER IS NOTHING BUT REPRESEN T ROUGH WORKINGS/JOTTINGS/SCRIBBLING. IT IS SETTLED LEGAL P OSITION THAT ONUS OF PROOF IS ON THE PERSON WHO MAKES ANY ALLEGATION AND NOT ON T HE PERSON WHO HAS TO DEFEND. AS PER LEGAL MAXIM AFFAIRMANTI NON NEGANTI INCUMBIT PROBATION MEANS BURDEN OF PROOF LIES UPON HIM WHO AFFIRM AND NOT UPON HIM WHO DENIES. SIMILARLY AS PER DOCTRINE OF COMMON LAW INCUMBIT PROBATION QUI DIGIT NON QUI NEGAT I.E. BURDEN LIES UPON ONE WHO ALLEGES AND NOT UPON ONE WHO DENY THE EXISTENCE OF THE FACT . THE LOOSE PAPER I.E. PAGE13,17,21 & 33 OF LPS-A-2 IS ROUGH WORKING/JOTTI NG. THE AO HAS FILED TO DISCHARGE HIS ONUS OF PROOF ESPECIALLY WHEN ADDITIO N HAS BEEN MADE UNDER DEEMING FICTION. IN VIEW OF THIS LACUNE ON THE PA RT OF AO, IMPUNGED ADDITION IS LEGALLY NOT SUSTAINABLE. AS HELD IN THE CASE OF CIT V/S KP VARGHESE 131 ITR 574 (SC) BY HOBBLE APEX COURT IN ABSENCE OF EVIDENCE THAT ACTUALLY ASSESSEE PAID MORE AMOUNT THAN DECLAR ED IN REGARDED DEED, NO ADDITION CAN BE MADE. IN THE CASE OF BANSAL STRIPS (P) LTD. & ORS VS. ACIT (2006) 99 ITD 177 (DEL) IT HAS BEEN HELD THAT:- IF AN INCOME NOT ADMITTED BY ASSESSEE IS TO BE ASS ESSEE IN THE HANDS OF THE ASSESSEE. THE BURDEN TO ESTABLISH THE SUCH INCOME I S CHARGEABLE TO TAX IS ON THE AO. IN THE ABSENCE OF ADEQUATE MATERIAL AS TO N ATURE AND OWNERSHIP OF THE TRANSACTIONS, UNDISCLOSED INCOME CANNOT BE ASSE SSED IN THE HANDS OF THE ASSESSEE MERELY BY ARITHMETICALLY TOTALLY VARIO US FIGURES JOTTED DOWN ON LOOSED DOCUMENTS. 4.3.5 THIS IS AN UNDISPUTED FACT THAT NEITHER ANY INCRIMI NATING MATERIAL WAS FOUND OR SEIZED DURING SEARCH PROCEEDINGS NOR T HE PAYER HAS EVER IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 143 ADMITTED ABOUT PAYMENT OF RS. 68,50,000/- ON THE CO NTRARY THE ADVANCE RECEIVED BY THE APPELLANT WAS EITHER DUE TO CANCELL ATION OR THE SAME IS DULY REFLECTED IN BOOKS OF ACCOUNT. IN ABSENCE OF ANY CO RROBORATIVE EVIDENCE TO PROVE THAT THERE WAS ANY EXCHANGE OF MONEY BY CASH, AO HAS NO LOCUS TO ASSUME THAT APPELLANT HAS RECEIVED RS. 68,50,000/-. IT IS SETTLED LAW THAT AO CANNOT MAKE ANY ADDITION MERELY ON BASIS OF SUSPICION, HOWEVER STRONG IT MAY BE. THE AO IS NOT JUSTIFIED IN PRESUMING CERTAIN FACTS WITHOUT HAVING ANYTHING TO CORROBORAT IVE. HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT C ANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HE LD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (954) 26 ITR 736 (SC). 4.3.6 IN VIEW OF THE ABOVE DISCUSSION, MATERIAL EVIDENCES ON RECORD AND CASE LAWS CITED, FIRSTLY, THE AO OUGHT TO HAVE EXAM INED THE CUSTOMER IN QUESTION FROM WHOM AS ALLEGED THE IMPUGNED CASH HAS BEEN RECEIVED. SECONDLY, THE AO SHOULD HAVE DONE INDEPENDENT ENQUI RY REGARDING THE IMPUGNED TRANSACTION. THIRDLY, THE LOOSE PAPER OR R ATHER SAY IT AS DUMB DOCUMENT SHOULD BE A SPEAKING ONE HAVING DIRECT NEX US WITH THE ASSESSEE AND TRANSACTION MENTIONED THEREIN, WHICH WAS NOT IN THE CASE OF APPELLANT. THIRDLY, THE AO DID NOT REJECT BOOKS OF ACCOUNT OF THE APPELLANT. FOURTHLY, NEITHER THE CUSTOMER NOR ANY OF THE PARTNER OF APPE LLANT HAS EVER STATED THAT SUCH TRANSACTION ACTUALLY OCCURRED. LAST BUT NOT TH E LEAST, THE IMPUGNED LOOSE PAPERS WERE NOT FOUND IN POSSESSION OF THE AP PELLANT. MY FINDINGS ON THE SAID ISSUE UNDER CONSIDERATION ARE BASED ON THE VARIOUS CONCULSIONS DRAWN BY ME WHICH HAVE BEEN DISCUSSED IN THE ABOVE PARAS. THEREFORE, THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 68,50,000/- BEING ON SHEER IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 144 ASSUMPTION AND PRESUMPTION BASIS. THUS, THE ADDITIO N MADE BY THE AO AMOUNTING TO RS. 68,50,000/- IS DELETED . THEREFORE APPEAL ON THIS GROUND IS ALLOWED. 117. AGAINST THESE FINDINGS OF LD. CIT(A), THE REVE NUE IS IN APPEAL. LD. COUNSEL FOR THE REVENUE RELIED ON THE ORDER OF LD. AO AND SUBMITTED THAT THE LOOSE SHEETS WERE FOUND FROM THE OFFICE OF ASSESSEE COMPANY. CASH RECEIPTS WERE DULY RECORDED IN THE LOOSE SHEETS, WHICH COULD NOT BE VERIFIED FROM THE BOOKS. THUS THE ADDITION OUGHT TO HAVE BEEN CONFIRMED. ON THE CONTR ARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN RESPECT OF ALLEGED AMOUNT RECEIVED FROM SMT. NIRMAL CHANDRA, RS. 20,00 ,000; THE BOOKING HAD ALREADY BEEN CANCELLED AND THE AMOUNT W AS REFUNDED TO HER. THE BOOKS SHOWING THE CANCELLATION ARE AT P B 1339-1340. THUS IN ANY CASE, SINCE THE BOOKING HAD BEEN CANCEL LED AND THE AMOUNT REFUNDED, NO INCOME IN FACT AROSE TO THE ASS ESSEE. SIMILARLY IN CASE OF SMT. SADHANA TIWARI, RS. 23,50,000; THE BOOKING WAS CANCELLED. CANCELLATION IS AT PB 1333-1334. FURTHER IN CASE OF SHRI VINOD SEMWAL & SMT. ARCHANA SEMWAL, RS. 21,00,000; THE BOOKING HAD BEEN CANCELLED AND AMOUNT REFUNDED PB 1336-1337 . IT WAS THEREFORE SUBMITTED THAT IN THESE CASES, SINCE THE INCOME WAS NOT BOOKED FROM THESE PARTIES AND THE ENTIRE AMOUNT WAS REFUNDED, IN IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 145 ANY CASE, NO ADDITION COULD BE MADE. FURTHER, LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE ALL LPS ARE SOME COMP UTER GENERATED SHEETS AND ARE UNSIGNED. THE MAKER OF THE DOCUMENT IS UNKNOWN AND FOR WHAT PURPOSE SAME WERE MADE ARE UNKNOWN. HA D THE LD. AO ANY DOUBT AS TO THE AMOUNT RECEIVED FROM THE CUS TOMERS, HE COULD HAVE ENQUIRED THE FACTS FROM THE CUSTOMERS. L D. AO DID NOT DO SO. FURTHER, THE ASSESSEE SUBMITTED THAT THE AMO UNT RECEIVED FROM SMT SHALINI JAIN WAS A BOOKING ADVANCE. THEREF ORE, EVEN IF THE AMOUNT IS TREATED AS UNACCOUNTED, IT CAN BE TAXED I N THE YEAR IN WHICH THE INCOME IS BOOKED ON MERCANTILE BASIS. HE THEREFORE RELIED ON THE ORDER OF LD. CIT(A) AND CONTENDED THAT THE O RDER OF LD. CIT(A) BE CONFIRMED. 118. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, FACT S OF THE CASE AND THE ARGUMENTS OF THE PARTIES. WE FIND THAT THE ASSESSEE IS CORRECT IN CONTENDING THAT IN RESPECT OF AMOUNT REC EIVED FROM SMT. NIRMALA CHANDRA, SMT. SADHANA TIWARI AND SHRI VINOD SEMWAL AND SMT. ARCHANA SEMWAL; THE AMOUNT RECEIVED, IF ANY WA S REFUNDED AS THE BOOKING WAS CANCELLED. WE THEREFORE HAVE NO DOU BT IN CONFIRMING THE ORDER OF THE LD. CIT(A) AND DISMISSI NG THE GROUND OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 146 REVENUE IN RESPECT OF THESE THREE PARTIES. SO FAR A S THE AMOUNT OF RS. 4,00,000/- ALLEGED TO BE RECEIVED FROM SMT. SHA LINI JAIN, WE FIND THAT IN THE LOOSE SHEET FOUND FROM THE OFFICE PREMISES OF THE ASSESSEE, RS. 4,00,000 IT WAS CLEARLY MENTIONED AS RECEIVED IN CASH. ANALYSIS OF THE PAPER ESTABLISHED THAT THE ASSESSEE HAS RECEIVED THIS AMOUNT FROM SMT. SHALINI JAIN. THIS AMOUNT OF RS. 4 ,00,000 OUGHT TO BE TREATED AS UNACCOUNTED RECEIPT OF THE ASSESSE E. WE THEREFORE CONFIRM THE ADDITION OF RS. 4,00,000 AS DONE BY THE LD. AO, AND TO THIS EXTENT THE ORDER OF LD. CIT(A) IS REVERSED. HO WEVER, WE NOTICE THAT ASSESSEE HAVE NOT BOOKED INCOME FROM SALE OF T HIS UNIT IN THE CURRENT A.Y. WE THEREFORE REMAND THIS ISSUE TO THE FILE OF LD. AO TO VERIFY AS TO WHEN THE INCOME FROM SALE OF UNIT HAS BEEN BOOKED IN THE CASE OF SMT. SHALINI JAIN AND ADD THE AMOUNT IN THE HANDS OF ASSESSEE IN THAT YEAR. 119. AS A RESULT, THIS GROUND OF APPEAL OF THE REV ENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. DELETION OF RS. 64 ,50,000 BY THE LD. CIT(A) IS ACCEPTED AND BALANCE AMOUNT RS. 4,00,000 SHALL BE TREATED AS INCOME OF THE ASSESSEE IN THE YEAR THE S ALE OF THE UNIT TO SMT. SHALINI JAIN IS TREATED AS INCOME. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 147 120. NOW WE TAKE UP GROUND NO. 4 OF THE DEPARTMENT S APPEAL FOR A.Y. 2012-13 RELATING TO ADDITION U/S. 40A(3) OF RS . 51,000. 121. DURING THE COURSE OF HEARING, LD. COUNSEL FOR THE REVENUE SUBMITTED THAT ASSESSEE PURCHASED 5.20 ACRES OF AGR ICULTURAL LAND FROM SHRI LAKHAN SINGH AND SMT. SHANTI BAI FOR RS. 2,57,40,000. OUT OF THIS AMOUNT RS. 51,000 WAS PAID BY CASH AS P ER THE SALE DEED. HE TOOK US TO PAPER BOOK PAGE 1343, WHEREBY I N THE SALE DEED RS. 51,000 WAS PAID BY CASH. LD. COUNSEL FOR T HE ASSESSEE, ON THE OTHER HAND, STATED THAT ENTIRE AMOUNT OF RS. 2, 57,40,000 WAS PAID BY CHEQUE. THE SAME IS CLEAR FROM THE LEDGER I N THE BOOKS OF ASSESSEE AT PB 1363-1365. LD. COUNSEL SUBMITTED THA T ALTHOUGH IT WAS MENTIONED THAT RS. 51,000 WOULD BE PAID IN CASH IN THE SALE DEED, BUT NO AMOUNT WAS PAID IN CASH. LD. COUNSEL F URTHER REFERRED TO THE AFFIDAVIT OF THE SELLERS PLACED AT PB 1369 A ND CONTENDED THAT SINCE THERE WAS NO NON-COMPLIANCE OF THE SECTION 40 A(3), NO DISALLOWANCE WAS CALLED FOR. 122. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND T HE EVIDENCES ON RECORD. THE FACT THAT RS. 51,000 WAS PAID IN CAS H WAS MENTIONED IN THE SALE DEED. THIS RESULTED IN CONFUSION, AND T HEREFORE ADDITION. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 148 HOWEVER, THE FACT CAN VERY WELL BE VERIFIED FROM TH E LEDGER ACCOUNT THAT ENTIRE AMOUNT WAS PAID BY CHEQUE. FURTHER, THE AFFIDAVIT OF THE SELLERS SUPPORT THIS FACT. NO ADDITION IS THEREFORE CALLED FOR. WE THEREFORE CONFIRM THE ORDER OF LD. CIT(A) ON THIS G ROUND AND DISMISSED GROUND NO. 4 OF DEPARTMENTS APPEAL FOR A .Y. 2012-13. 123. NOW WE TAKE UP COMMON GROUNDS BEING GROUND NO. 8 OF DEPARTMENTS APPEAL FOR A.Y. 2012-13 (RS. 1,16,60,0 00) AND GROUND NO. 10 OF DEPARTMENTS APPEAL FOR A.Y. 2013- 14 (RS. 4,00,000). THESE GROUNDS RELATE TO ADDITION ON ACCO UNT OF UNEXPLAINED EXPENDITURE AS PER LOOSE PAPERS LPS 1/2 PAGE NO. 69- 71. 124. THE FACTS RELATING TO THESE GROUNDS OF APPEA L ARE THAT DURING THE COURSE OF SEARCH AND SEIZURE, AT THE RESIDENTIA L PREMISES OF SHRI YASHOVARDHAN JAIN, GENERAL MANAGER (FINANCE) OF THE ASSESSEE COMPANY, A LOOSE PAPER TITLED AS NEW LAND AT PHAND A WAS FOUND. THE SAME WAS MARKED AS LPS 1/2 PAGE NO. 69 TO 71. T HIS WAS A COMPUTER GENERATED LEDGER NOTING WHEREBY CERTAIN AM OUNT WAS STATED TO BE PAID AND RECEIVED. LD. AO NOTED THAT O N BEING CONFRONTED, SHRI HEMANT SONI COULD NOT EXPLAIN THE ENTRIES IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 149 CONTAINED THEREIN. FURTHER, SOME PERSONS NAMED THER EIN WERE IDENTIFIED AND CALLED AND THEIR STATEMENTS ON OATH HAD BEEN RECORDED. THEY HAD ACCEPTED ON-MONEY. LD. AO ON THE BASIS OF SAME, HELD THAT THE SAME REPRESENTS ON-MONEY PAID B Y THE ASSESSEE IN RESPECT OF PURCHASE OF LAND AT PHANDA. HE THEREF ORE ADDED RS. 1,16,40,000 IN A.Y. 2012-13 AND RS. 4,00,000 IN A.Y . 2013-14. 125. AGAINST THIS ADDITION, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A). LD. CIT(A) IN HIS ORDER, DELETED THE AD DITION, DISCUSSING THE ISSUE AT PAGE 163 TO 175 OF HIS ORDER, SIMILAR FINDINGS WERE GIVEN IN A.Y. 2013-14. 126. AGAINST THE FINDINGS OF THE LD. CIT(A), THE DE PARTMENT IS IN APPEAL. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF THE GENERAL MANAGER (FINANCE), SHRI YASHOVARDHAN JAIN WERE ALSO SEARCHE D. AT HIS RESIDENCE, LOOSE PAPER LPS 1/2 PAGE 69 OT 71 WAS FO UND, WHICH CONTAINED A LEDGER ACCOUNT OF CASH PAID FOR THE PUR CHASE OF LAND AT PHANDA. THUS, LOOSE PAPER CONTAINS THE DETAILS OF P AYMENT MADE. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 150 HE THEREFORE RELIED ON THE DETAILED FINDINGS OF THE LD. AO IN THIS REGARD. 127. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DOCUMENT WAS NOT FOUND FROM THE PREMISES OF THE ASSESSEE COMPANY. THE SAME WAS FOUND FROM THE RESIDENCE OF S HRI YASHOVARDHAN JAIN. THE SAID DOCUMENT WAS A COMPUTER SHEET, WHICH WAS UNSIGNED IN A LEDGER FORM. IT WAS UNKNOWN AS TO WHO CREATED IT AND FOR WHAT PURPOSES IT WAS MADE. HE FU RTHER CONTENDED THAT MOST OF THE ENTRIES IN THE SAID DOCUMENT WERE DUMB, IT WAS MENTIONED AS TO CASH PAID THRU M D SIR; BUT TO WH OM CASH WAS PAID AND FOR WHAT PURPOSES WAS UNKNOWN. LD. COU NSEL FURTHER SUBMITTED THAT THE ENTRIES MADE IN THE LOOSE SHEET WERE NOT CORROBORATED AND NO EFFORT WAS MADE TO CORRELATE TH ESE ENTRIES WITH ANY UNACCOUNTED PAYMENT AS ALLEGED. LD COUNSEL FURT HER CONTENDED THAT THE LD. AO ADOPTED AN APPROACH OF PI CK AND CHOOSE AND CHOOSE SOME ENTRIES FOR MAKING THE ADDITION WHI LE IGNORED OTHER ENTRIES. THE BASIS FOR SUCH PICK AND CHOOSE W AS UNKNOWN. HE THEREFORE CONTENDED THAT THE DOCUMENT FOUND WAS A M ERE DUMB IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 151 DOCUMENT AND THE ENTRIES IN THE DOCUMENT WERE NOT C ORROBORATED BY THE REVENUE WITH ANY DOCUMENT. 128. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, AND GONE THROUGH THE ORDERS OF THE LD. LOWER AUTHORITIES. THE DOCUME NT MARKED AS LPS 1/2 PAGE 69 TO 71 WAS FOUND DURING THE COURSE O F SEARCH AT THE RESIDENCE OF SHRI YASHOVARDHAN JAIN, GENERAL MANAGE R (FINANCE) OF THE ASSESSEE COMPANY. HOWEVER, NO ENQUIRY WAS EVER BROUGHT ON RECORD AS TO WHO WAS THE MAKER OF THE DOCUMENT, FOR WHAT PURPOSES IT WAS MADE. THE ENTRIES IN THE DOCUMENT WERE INCOM PLETE. IT WAS UNKNOWN TO WHOM CASH WAS PAID. THE ENTRIES IN ANY C ASE COULD NOT BE CORROBORATED BY BRINGING ANY MATERIAL ON RECORD. IT IS ALSO UNKNOWN AS TO WHY LD. AO ADOPTED A PICK AND CHOOSE METHOD AND ADDED SOME ENTRIES WHILE NOT MAKING ADDITION ON OTH ER ENTRIES. IN ANY CASE, IN RESPECT OF ON-MONEY PAYMENT FOR PURCHA SE OF LAND AT PHANDA, LD. AO HAS ALREADY MADE ADDITION IN RESPECT OF 27 REGISTRIES FOUND AND THE SAME SHALL BE DEALT BY US IN SUBSEQUENT PARAS. IN RESPECT TO THE PURCHASE OF LAND, SEPARATE DISCUSSION IS MADE IN RESPECT OF THE STATEMENTS OF THE PARTIES. T HE ENTIRE APPROACH OF MAKING ADDITION BASED ON THIS DOCUMENT SEEMS TO BE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 152 UNCALLED FOR. WE THEREFORE ARE IN FULL AGREEMENT WI TH THE FOLLOWING FINDING OF LD. CIT(A) (RELEVANT EXTRACT): 4.9.2 I HAVE CONSIDERATION THE PLEA RAISED BY THE APPELLA NT AND FINDINGS OF THE AO. IT IS SEEN THAT LOOSE PAPER I.E. PAGE NO. 6 9 TO 71 OF LPS-1/2 WAS FOUND IN POSSESSION OF SHRI YASHOVARDHAN JAIN. THE IMPOUNDED PAPER I.E. PAGE NO. 69 TO 71 OF LPS-1/2, CONTAIN DETAILS OF CA SH PAYMENT FOR PURCHASE OF NEW LAND OF PHANDA, IS A DOCUMENT WHICH IS NOT S IGNED BY APPELLANT OR ITS AUTHORIZED REPRESENTATIVE AND CONTAIN SOME ROUG H NOTHING/JOTTINGS. APPELLANT DURING APPELLATE PROCEEDINGS SUBMITTED TH AT THE AO RELIED UPON THE STATEMENT GIVEN BY SHRI YASHOVARDHAN JAIN AND O THER SELLERS. THE SELLERS WHO HAS GIVEN STATEMENT UNDER PRESUME AS R ETRACTED AND HAS FUILED AFFIDAVIT STATING THAT NO CASH HAS BEEN RECEIVED FR OM THE APPELLANT COMPANT. THIS IS ADMITTED FACT THAT STATEMENTS OF 21 SELLERS WERE RECORDED. THIS IS ALSO AN ADMITTED FACT THESE STATEMENTS WERE RECORDE D BEHIND THE BACK OF APPELLANT. NO OPPORTUNITY OF CROSS-EXAMINATION WAS ALLOWED TO THE ASSESSEE THOUGH SPECIFICALLY ASKED FOR BY THE ASSESSEE. IT H AS BEEN HELD BY HONBLE GUJRAT HIGH COURT IN THE CASE OF DCIT V/S MAHENDRA AMBALA PATEL & CIT V/S KANTILALBHAI RAVIDAS PATEL THAT STATEMENT HAS NO EVIDENTIARY VALUE IF OPPORTUNITY OF CROSS-EXAMINATION IS NOT ALLOWED. BE SIDES THIS, GENUINENESS OF IMPUNGED LOOSE PAPER. IT WAS SHRI YASHOVARDHAN J AIN WHO HAS TO PROVE THAT HOE THE TRANSACTION MENTIONED IN THE LOOSE PAP ERS WERE EXECUTED. IT IS NOT UNDERSTANDABLE AS TO HOW INDEPENDENTLY AND IMPA RTIALLY, THE AO COULD REACH TO FINAL CONCLUSION THAT ON MONEY AMOUNT TOTA LING TO RS. 1,16,60,000/- WAS PAID FOR PURCHASE OF LAND FROM DIFFERENT SELLER S WITHOUT EVEN BRINGING A SINGLE IOTA OF POSITIVE AVIDENCE ON RECORD. HENCE, THE ADDITION MADE BY THE AO WAS BASED ON MERE GUSES WORK, CONJUCTURES AND SU RMISES WHICH WAS NO PLACE IN TAX JURISPRUDENCE. IN SUM & SUBSTANCE, ACTION OF THE AO IS NEITHER SUSTAINABLE ON FACTS NOR IN LAW, BEING BASE D ON EITHER THIRD PARTY IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 153 STATEMENT OR STATEMENT SELLERS WHO LATERON RETRACTE D FROM THEIR STATEMENTS BY STAING THAT STATEMENTS GIVEN BEFORE AO WERE GIVE N UNDER PRESSURE. 4.9.6 IN VIEW OF THE ABOVE, FIRSTLY, THE AO OUGHT TO HAVE GIVEN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT. SECONDLY, TH E AO SHOULD HAVE BROUGHT EVIDENCE HAVING DIRECT NEXUS WITH THE ALLEGED ON MO NEY PAYMENT OF RS. 1,16,60,000/- FOR PURCHASE OF LAND. THIRDLY, THE AD DITION MADE BY THE AO ARE ON ASSUMPTION AND PRESUMPTION BASIS. FUTHER, TH E LOOSE PAPERS WERE FOUND IN POSSESSION OF SHRI YASHOVRDHAN JAIN AND NO T FROM APPELLANT. FIFTHLY, STATEMENTS OF SELLERS/OWNERS OF LANDS WERE RECORDED, THE APPELLANT HAS FILED COPIES OF THEIR AFFIDAVIT, DULLY RETRACTI NG THEIR EARLIER STATEMENTS RECORDED BY THE AO, WHEREIN THEY HAVE DENIED RECEIP T OF ANY CASH OVER AND ABOVE THE AMOUNT AS MENTIONED IN REGISTERED SALE DE ED. THIS HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE KOLKATA IN CIVIL APPEAL NO. 248 OF 2006 THAT IN ABSENCE OF CROSS-EXAMINATION OF PARTIES, TH E ASSESSMENT PROCEEDINGS TO BE QUASHED. MY FINDINGS ARE BASED ON THE FINDINGS GIVEN IN ABOVE MENTIONED PARAS. THUS, KEEPING IN VIEW THE AB OVE DISCUSSION AND JUDICIOUSLY FOLLOWING THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF KISHANCHAND CHELLARAM (SUPRA) & ANDAMAN TIMBER INDU STRIES VS. COMMISSIONER OF CENTRAL EXCISE KOLKATA (SUPRA), THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 1,16,60,000/- O N DEEMED FICTION AND WITHOUT GIVING OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT. THUS, THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 154 ADDITION MADE BY THE AO AMOUNTING TO RS. 1,16,60,000/- IS DELETED. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. . WE THEREFORE DISMISS GROUND NO. 8 OF DEPARTMENTS A PPEAL FOR A.Y. 2012-13 AND GROUND NO. 10 FOR A.Y. 2013-14. 129. THE NEXT GROUND OF APPEAL IS GROUND NO. 9 FOR A.Y. 2012-13 OF THE DEPARTMENTS APPEAL WHEREBY THE DEPARTMENT HAS CHALLENGED THE DELETION OF ADDITION RS. 1,77,65,000 IN RESPECT OF LPS A-13 RELATING TO ON-MONEY IN RESPECT OF 21 REGISTRIES FO UND FROM THE OFFICE ASSESSEE-COMPANY AND 6 REGISTRIES FOUND FROM THE SI TE OFFICE OF AAKRITI AQUA CITY. 130. THE FACTS ARE THAT DURING THE CURRENT YEAR, AS SESSEE PURCHASED FOLLOWING LANDS FROM RESPECTIVE PERSONS: NAME OF FARMERS LAND SITUATED AT AREA SERIAL NO. AND P .NO. OF ASSMT. ORDER DATE OF SALE REGD. SALE CONSIDER ATION RS. MARKET VALUE RS. ADDITION MADE BY A.O. TOWARDS UNEXPLAINE D EXPENDITURE AMT. (RS. REMARKS SMT. RAJSHWARI S/O. ANAND RAWAT DEEPDI PATWARI HALKA S.NO.6 P. NO . 26-07- 2011 325100 0 3251000 2900000 MUKESH PATIDAR S/O.SHRI IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 155 SMT. SONALI W/O/SHRI MOHIT KUMAR & SMT.SHANO DEVI W/O. HARI PRAKASH SAXENA VILL. RAPADIA THE. HUZUR, BHOPAL THROUGH POWER OF ATTORNEY HOLDER MUKESH PATIDR /S. SHRI /SHIVCHARAN PATIDAR TOTAL 0.81 HECTRE 2. 00 ACRES 101 PB 1376- 1392 SHIVCHARAN PATIDAR POWER OF ATTORNEY HOLDER RECORDED THE STATEMENT THAT HE RECEIVED RS. 28,34000 IN CASH AGAINST TWO LAND DEEP SINGH VILL.. PHANDA KALAN DISTT. HUZUR, BHOPAL VIKASH KHAND PHANDA 2.876HE CRE 7.10 ACRES SL. NO. 7 P.NO. 101 16-02- 2012 PB 867- 897 243440 00 24344000 364000 STATEMENT RECORDED ON 26-02-2015 . 7.10 ACRES AGRI.LAND RS. 3480000 PER ACRE SOLD TO AG8 VENTURES LTD SHRI LAKHAN SINGH S/O. SHRI KAMLA SINGH SMT. SHANTI BAI W/O. KAMAL SINGH GRAM PHANDA KALAN 2.108 HECTRE 5.20 ACRES SL.NO. 8 P.NO. 102 14.03.20 12 PB 1393- 1412 257400 00 25740000 51000 SHRI LAKHANSINGHS/ O. KAMAL SINGH ADMITTED THAT HE RECEIVED RS.51000 IN CASH . STATEMENT RECORDED O 26- 02-2015 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 156 SMT. MATHRI BAI W/O SHANKARLAL SHRI PREMNARAYN SHRI RAJMAL BOTH WERE S/O. SHANKARLAL VILL. PHAND KALAN THE. HUZUR, BHOPAL 0.810 HECTRE SL. NO. 9 23-03- 2012 PB 1413- 1421 710000 0 8100000 900000 STATEMENT RECORDED BY RAJMAL S/O. SHANKARLAL ON 05-02-2016 THAT HE RECEIVED 900000 IN CASH RS. 51000 AS ADVANCE AND RS. 849000 AT THE TIME OF REGISTRY. 42,15,000 131. LD. AO RELIED ON THE STATEMENTS OF THE PARTIES AND CONTENDED THAT ON-MONEY WAS PAID BY THE ASSESSEE-COMPANY. HE THEREFORE MADE ADDITION OF RS. 1,77,65,000 IN RESPECT OF ON-M ONEY. 132. AGAINST THIS ADDITION, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION, OBSERV ING AS UNDER AT PAGE 191 ONWARDS OF HIS ORDER:- 4.10.3 DUE CONSIDERATION IS GIVEN TO THE SUBMISSION FILED BY THE APPELLANT INTER ALIA THE EVIDENCE FURNISHED. LET ME FIRST SUM MARIES THE BASIS ON WHICH ADDITIONS HAVE BEEN MADE BY THE AO. THE AO HA SOLEL Y RELIED UPON STATEMENTS RECORDED OF SELLER OR POA HOLDER. THE AD DITION MADE BY THE AO ARE PURELY HYPOTHETICAL AND WITHOUT ANY INDEPENDENT CORROBORATIVE TO THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 157 APPELLANT. THE AO ALSO DID NOT PROVIDE OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT. THE AO HAS CONSISTENTLY HARPED ON TH E STATEMENTS OF SELLERS. THIS IS AN ADMITTED FACT THAT STATEMENT OF 21 WERE RECORDED BEHIND THE BACK OF APPELLANT. NO OPPORTUNITY OF CROSS-EXAMINATION W AS ALLOWED TO THE ASSESSEE THOUGH SPECIFICALLY ASKED FOR BY THE ASSES SEE. IT HAS BEEN HELD BY HONBLE GUJRAT HIGH COURT IN THE CASE OF DCIT V/S MAHENDRA AMBBALAL PATEL & CIT V/S KANTILALBHAI RAVIDAS PATEL THAT STATEMENT HAS NO EVIDENTIARY VALUE IF OPPORTUNITY OF CROSS-EXAMINATI ON IS NOT ALLOWED. BESIDES THIS, APPARENTLY THE AO DID NOT INDEPENDENTLY VERIF IED THE FACTS ABOUT THE GENUINENESS OF THE SAID PARTY AS WELL AS THE IMPUNG ED PURCHASE TRANSACTION. IT IS NOT UNDERSTANDABLE AS TO HOW IND EPENDENTLY AND IMPARTIALLY, THE AO COULD REACH TO THE FINAL CONCLU SION THAT ON MONEY AMOUNTING TOTALING TO RS. 1,77,65,000/- (CORRECTLY RS. 42,15,000/-)WAS PAID FOR PURCHASE OF LAND FROM DIFFERENT SELLERS WITHOUT EVEN BRINGING A SINGLE IOTA OF POSITIVE EVIDENCE ON RECORD EXCEPT THE STATEMENT OF FARMERS OR POA HOLDER WHICH WAS ALSO RECORDED BEHIND THE BACK OF ASSESSEE . HENCE, THE ADDITION MADE BY THE AO WAS BASED ON MERE GUESS WORK, CONJUC TURES AND SURMISES,WHICH HAS NO PLACE IN TAX JURISPRUDENCE. I N SUM & SUBSTANCE, ACTION OF THE AO IS NEITHER SUSTAINABLE ON FACTS NOR IN LAW, BEING BASED ON THIRD PARTY STATEMENT OR SELLERS. 4.10.8 IN VIEW OF THE ABOVE, FIRSTLY, THE AO OUGHT TO HAVE GIVEN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT. SECONDLY, TH E AO SHOULD HAVE BROUGHT EVIDENCE HAVING DIRECT NEXUS WITH THE ALLEGED ON MO NEY PAYMENT OF RS. 1,77,65,000/- (CORRECTLY RS. 42,15,000/-). THIRDLY, THE ADDITION MADE BY THE AO ARE ON ASSUMPTION AND PRESUMPTION BASIS. FUTHER, THE LOOSE PAPERS WERE FOUND IN POSSESSION OF SHRI YASHOVRDHAN JAIN A ND NOT FROM APPELLANT. FIFTHLY, STATEMENTS WERE RECORDED BY THE THEN ADIT WHO WAS NOT APPROPRIATE JURISDICTIONAL OFFICER. MY FINDINGS ARE BASED ON THE FINDINGS GIVEN IN ABOVE MENTIONED PARAS. THUS, KEEPING IN VI EW THE ABOVE DISCUSSION AND JUDICIOUSLY FOLLOWING THE DECISION OF HONBLE S UPREME COURT IN THE CASE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 158 OF KISHANCHAND CHELLARAM (SUPRA), THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 1,77,65,000/- (CORRECTLY RS. 42,15, 000/-). THUS, ADDITION MADE BY THE AO AMOUNTING TO RS. 1,77,65,000/- IS DELETED BEING ON THE BASIS OF STATEMENT RECORDED BEHIND THE BACK OF APPE LLANT AND NO MEANINGFUL OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDED. THER EFORE, APPEAL ON THIS GROUND IS ALLOWED. 133. AGAINST THIS FINDINGS, THE REVENUE IS IN APPEA L. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT THERE WERE SUFFICIENT EV IDENCES IN THE FORM OF STATEMENT OF THE SELLERS TO MAKE ADDITION F OR ON-MONEY PAYMENTS. HE FURTHER SUBMITTED THAT THE CASH RECEIV ED BY THE SELLERS WERE DEPOSITED IN THE BANK ACCOUNTS, AND HE NCE THE PAYMENT OF ON-MONEY WAS CORROBORATED. HE THEREFORE RELYING ON THE ASSESSMENT ORDER CONTENDED THAT THE ADDITION AS MAD E BY LD. AO SHALL BE CONFIRMED. 134. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION IS UNCALLED FOR. AT THE OUTSET, HE SUB MITTED THAT THE ADDITION MADE IS RS. 1,77,65,000; BUT THE TOTAL OF THE ON-MONEY AS PER THE CHART CAME TO RS. 42,15,000. HENCE THE BALA NCE ADDITION HAS NO LEGS TO STAND. NOW IN RESPECT OF THE ADDITIO N OF RS. 42,15,000, HE SUBMITTED THAT DURING THE YEAR THE AS SESSEE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 159 PURCHASED LAND FROM FOUR SELLERS. IN RESPECT OF FIR ST SELLER SMT. RAJESHWARI W/O SHRI ANAMD RAI (ADDITION RS. 28,34,0 00), 2 ACRES OF LAND WAS PURCHASED. STATEMENT ALLEGEDLY OF ONE SHRI MUKESH PATIDAR WAS RECORDED. LD. COUNSEL FOR THE ASSESSEE TOOK US TO PB 1385 AND SUBMITTED THAT IT IS UNKNOWN THAT IT WAS S TATEMENT OF SHRI MUKESH PATIDAR OR SHRI ARJUN PATIDAR AS THE SA ME IS NOT CLEAR FROM THE STATEMENT ITSELF. FURTHER, HE SUBMITTED TH AT IN EITHER CASE, NEITHER SHRI MUKESH PATIDAR NOR SHRI ARJUN PATIDAR HAD ANY RELATION WITH THE TRANSACTION. WHY LD AO CHOOSE NOT TO RECORD STATEMENT OF SELLER HERSELF IS UNKNOWN. FURTHER, TH E FACT OF PAYMENT OF ON-MONEY WAS NOT CORROBORATED. IN RESPECT OF THE SECOND SELLER SHRI DEEP SINGH (ADDITION RS. 3,64,000), LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT 7.10 ACRES OF LAND WAS PURC HASED BY THE ASSSESSEE FOR RS. 2,43,44,000. ALL THE PAYMENTS WER E MADE BY CHEQUE. NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO SHOW ON-MONEY. SUBSEQUENTLY, HIS STATEMEN T WAS RECORDED. HE STATED TOTAL CONSIDERATION AS CORRECT I.E. RS. 2,43,44,000; BUT STATED AMOUNT RECEIVED IN CASH RS. 3,64,000 AS ON-MONEY. THUS, THE STATEMENT ITSELF WAS CONTRADICT ORY. FURTHER, IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 160 THE SAID STATEMENT WAS NOT CORROBORATED BY PRODUCIN G ANY BANK ACCOUNT AS ALLEGED BY LD AO. IN RESPECT OF THIRD SE LLER SHRI LAKHAN SINGH AND SMT. SHANTI BAI (ADDITION RS. 51,000), LD . COUNSEL CONTENDED THAT 5.20 ACRES OF LAND WAS PURCHASED FRO M THEM. THERE WAS NO ON-MONEY PAYMENT AND ALL THE PAYMENT WAS BY CHEQUE AND DULY RECORDED IN THE BOOKS. NO EVIDENCE WAS FOUND D URING THE COURSE OF SEARCH TO SHOW ON-MONEY. SUBSEQUENTLY, TH E STATEMENT OF THE SELLER WAS RECORDED. THE STATEMENT AS AVAILABLE AT PAGE 110 - 112 OF THE ASSESSMENT ORDER DOES NOT REFER TO ANY O N-MONEY PAYMENT. HOW THE LD. AO ARRIVED AT THIS FIGURE IS U NKNOWN. FURTHER, AN AFFIDAVIT OF THE SELLER WAS ALSO FILED TO ESTABLISH THAT THERE WAS NO ON-MONEY. IN RESPECT OF THE FOURTH SEL LER SMT MATHRI BAI W/O SHRI SHANKARLAL, SHRI RAJMAL AND OTHERS (AD DITION RS. 9,00,000), IT WAS SUBMITTED THAT 2 ACRES OF LAND WA S PURCHASED BY THE ASSESSEE FOR RS. 71 LAKHS. ALL THE PAYMENTS WER E BY CHEQUE AND THE TRANSACTION WAS DULY RECORDED IN THE BOOKS. NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH TO SHOW ANY ON-MO NEY. SUBSEQUENTLY, STATEMENT OF ONLY ONE SELLER, SHRI RA JMAL WAS RECORDED. IN HIS STATEMENT, HE WRONGLY MENTIONED TH AT RS. 9,00,000 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 161 WAS RECEIVED IN CASH AS ON-MONEY. HOWEVER, LATER-ON HE FILED AN AFFIDAVIT DENYING TO HAVE RECEIVED ANY ON-MONEY. LD COUNSEL LASTLY SUBMITTED THAT THE LD. AO CONTENDED THAT THE BANK S TATEMENTS WERE GIVEN BY THE SELLERS TO SHOW THAT AMOUNT WAS D EPOSITED IN THEIR BANK. NO SUCH BANK STATEMENTS WERE EVER BROUG HT ON RECORD. THE SAME IS NOT FILED IN THE DEPARTMENTS PAPER BOO K ALSO. IT WAS THEREFORE CONTENDED THAT SUCH BANK STATEMENT, IF AN Y, CANNOT BE RELIED ON. 135. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, EVID ENCES ON RECORDED AND ORDERS OF THE LD. LOWER AUTHORITIES. A T THE OUTSET, IT IS NOTED THAT THE LD. AO MADE ADDITION OF RS. 1,77,65, 000. HOWEVER, THE BASIS FOR MAKING SUCH ADDITION IS NOT CLEAR. TH E TOTAL OF ADDITION AS PER THE LD. AO HIMSELF SHALL COMES TO RS. 42,15, 000. THUS BALANCE ADDITION IS BASELESS. NOW IN RESPECT OF ADD ITION FOR ON- MONEY, WE NOTICE THAT DURING THE COURSE OF SEARCH, 27 REGISTRIES WERE FOUND. THE TRANSACTIONS MENTIONED THEREIN WERE DULY RECORDED IN THE BOOKS. NO EVIDENCE SHOWING ON-MONEY WAS FOUN D. THUS, IN THE PROCEEDINGS U/S. 153A R/W SECTION 143(3), NO AD DITION CAN BE MADE IN RESPECT OF ON-MONEY PAYMENT. THE ADDITION T HEREFORE IS NOT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 162 SUSTAINABLE. IN ANY CASE, WE OBSERVE THAT THE ADDIT ION IS NOT JUSTIFIED. IN RESPECT OF PURCHASE OF LAND FROM SMT. RAJESHWARI, STATEMENT OF SHRI MUKESH PATIDAR AND SHRI ARJUN PAT IDAR WHO ARE NOT CONNECTED WITH THE TRANSACTION WOULD BE FUTILE. FURTHER, IN RESPECT OF SHRI DEEP SINGH, THERE IS AN APPARENT CO NTRADICTION IN HIS STATEMENT, AS AT ONE PLACE HE IS STATING THE TO TAL CONSIDERATION AT RS. 2,43,44,000 AS RECORDED IN BOOKS AND PAID BY CHEQUE, BUT ON THE CONTRARY HE STATED THAT RS. 3,64,000 WAS PAID I N CASH AS ON- MONEY. IN RESPECT OF SHRI LAKHAN SINGH AND SMT. SHA NTI BAI, THERE IS NO CONFESSION OF ON-MONEY IN THE STATEMENT AVAIL ABLE ON RECORD. IN RESPECT OF SMT. MATRI BAI, SHRI RAJMAL AND OTHER S, THE CONFESSION OF ON-MONEY WAS LATER RETRACTED BY THE SELLER HIMS ELF. IT IS A SETTLED LAW THAT THE STATEMENT OF THIRD PARTIES, WHICH ARE NOT CORROBORATED CANNOT BIND THE ASSESSEE. NO CORROBORATIVE EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW ON-MONEY. LD. AO STATED T HAT AMOUNT WAS DEPOSITED IN THE BANK BY THE SELLERS; BUT WHY S UCH BANK STATEMENTS WERE NOT BROUGHT ON RECORD AND CONFRONTE D TO THE ASSESSEE. AT THIS STAGE ALSO, NO SUCH BANK STATEMEN TS WERE PRODUCED. WE THEREFORE ARE FULLY IN AGREEMENT WITH THE FINDINGS OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 163 LD. CIT(A) AND THEREFORE CONFIRM THE ORDER OF LD. C IT(A). IN THE RESULT, GROUND NO. 9 OF THE DEPARTMENTS APPEAL FOR A.Y. 2012-13 IS HEREBY DISMISSED. 136. THE NEXT GROUND OF APPEAL IS GROUND NO. 11 OF THE DEPARTMENTS APPEAL FOR A.Y. 2012-13 RELATING TO AD DITION OF RS. 15,00,000 IN RESPECT OF UNACCOUNTED CASH TRANSACTIO NS WITH SHRI VISHNU GUPTA. 137. THE FACTS RELATING TO THIS GROUND OF APPEAL AR E THAT DURING THE COURSE OF SURVEY U/S. 133A AT THE PREMISES OF THE A SSESSEE COMPANY IN AUGUST 2013, A DOCUMENT LPS 16 PAGE 42 W AS FOUND. THIS DOCUMENT WAS A COMPUTER GENERATED DOCUMENT AND RELATED TO PURCHASE OF ONE FLAT AR 01 302 DL. AS PER THE LD. AO, A CONSULTANCY FEES OF RS. 10 LAKHS WAS CREDITED BY TH E ASSESSEE COMPANY IN THE MEMORANDUM LEDGER RELATING SHRI VISH NU GUPTA, WHO ACTED THOUGH HIS COMPANY, M/S. VSP CONSULTANTS P LTD. FURTHER, ON 17.09.2011, IT HAS BEEN MENTIONED THAT RS. 5,00,000 IN CASH HAS BEEN PAID. THUS, LD AO CONTENDED THAT AS SESSEE COMPANY HAS RECEIVED RS. 15,00,000 FROM SHRI VISHNU GUPTA IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 164 ACTING THOUGH HIS COMPANY M/S. VSP CONSULTANTS P LT D. HE THEREFORE ADDED RS. 15,00,000 IN THE HANDS OF THE A SSESSEE. 138. AGAINST THIS ADDITION, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION AT PAGE NOS. 205 TO 208, HOLDING AS UNDER: 4.12.3 I HAVE CONSIDERED THE FACTS OF THE CASE, WRITTEN SU BMISSION FILED BY THE APPELLANT AND FINDING OF THE AO. DURIN G THE COURSE OF SURVEY PAGE NO. 42 OF LPS-16 WAS IMPUNGED FROM BUSINESS PR EMISES OF APPELLANT. THIS IMPUNGED LOOSE PAPER IS AN UNSIGNED COPY OF LE DGER ACCOUNT OF M/S VPS CONSULTANTS P. LTD. M/S VPS CONSULTANT HAS BOOK ED A FLAT IN THE NAME OF HIS DIRECT SHRI VISHU GUPTA AT PROJECT ASTER ROY AL OF APPELLANT COMPANY ON 20.04.2011 FOR A TOTAL SALE PRICE OF RS. 51,00,0 00/-. SHRI VISHNU GUPTA IS A FINANCIAL CONSULTANCY TO THE APPELLANT COMPANY FR OM PAST MANY YEARS. WHEN THE CONSULTANCY WORK GOT COMPLETED M/S VSP CON SULTANTS P. LTD A COMPANY OF SHRI VISHU GUPTA RAISED BILL OF RS. 62,9 2,160/- ON THE ASSESSEE COMPANY FOR CONSULTANCY SERVICES BEING PROVIDED BY SHRI VISHNU GUPTA. FURTHER, SHRI VISHNU GUPTA ISSUED TWO CHEQUES OF RS . 1,00,000/- AND RS. 5,00,000/- TO THE APPELLANT COMPANY FOR PURCHASED O F FLAT AS MENTIONED ABOVE, THE SAME FACT IS ALSO NARRATED ACCOUNT OF SH RI VISHNU GUPTA IN THE BOOKS OF APPELLANT. THEREAFTER, SUM OF RS. 11,00,00 0/- WAS RECEIVED BY THE APPELLANT FROM SHRI VISHUN GUPTA ON 28.12.2011 OUT OF WHICH RS. 6,00,000 WAS RETURNED BACK THROUGH RTGS ON 28.12.2011. FURTH ER, SUM OF RS. 6,00,000/- & 5,00,000/- WERE ALSO RETURNED ON 24.07 .2013. THUS, THE ENTIRE RECEIPT FROM SHRI VISHNU GUPTA WERE RETURN BACK BY APPELLANT AS THE FACT AT PROJECT ASTER ROYAL WAS PURCHASE BY SHRI VISHNU GUP TA. APPELLANT DURING APPELLANT PROCEEDINGS HAS STRONGLY CONTENDED THAT C ASH AMOUNTING TO RS. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 165 5,00,000/- WAS NEITHER RECEIVED NOR PAID BY THE APP ELLANT TO M/S VSP CONSULTANTS P. LTD. APPELLANT HAS ALSO SUBMITTED TH AT THE AO HAS ONLY RELIED UPON THE IMPUNGED UNSIGNED ROUGH PAPER FOUND DURING THE COURSE OF SURVEY, WITHOUT HAVING ANY CORROBORATIVE EVIDENCE O N RECORD SHOWING PAYMENT/RECEIPT OF CHASH OF RS. 5,00,000/-. APPELAN T IN SUPPORT HAS PLACED RELIANCE ON THE DECION OF HONBLE SUPREME COURT IN THE CASE OF CBI VS VC SHUKLA (1980) 3 SCC 410 WHEREIN IT HAS BEEN HELD TH AT LOOSE CANNOT BE CONSIDERED AS BOOKS. 4.12.4 ON CONSIDERING THE ENTIRE FACTUAL MATRIX OF THE ISS UE, INTER-ALIA SUBMISSIONS FILED BY THE APPELLANT I REACH TO A CON CULSION THAT THE ADDITIONS MADE BY THE AO ARE ON PRESUMPTIVE BELIEF THAT SUM O F RS. 5,00,000/- WAS RECEIVED BY APPELLANT FROM M/S VSP CONSULTANTS P. L TD. AS DISCUSSED ABOVE, ALL THE AMOUNT RECEIVED BY THE APPELLANT FRO M SHRI VISHNU GUPTA WAS RETUNED BACK BY APPELLANT BECAUSE THE FLAT WAS NOT PURCHASED BY SHRI VISHNU GUPTA. THEREFORE, NO PRUDENT WILL PAY HUGE S UM OF RS. 5,00,000/- FOR NO REASON TO THE APPELLANT COMPANY. A BILL WAS RAISED BY M/S VSP CONSULTANTS P LTD. FOR CONSULTANCY SERVICES PROVIDE D BY TEAM TO THE APPELLANT OF RS. 51,00,000/- ON 14.02.2004 FOR TOTA L AGREEGATE PROFESSIONAL CONSULTANCY CHARGES OF RS. 62,92,160/-. THE APPELLA NT HAS PAID ENTIRE AMOUNT OF CONSULTANCY CHARGES TO SHRI VPS CONSULTAN TS P. LTD. THROUGHT CHEQUES. 4.12.5 IT IS IMPORTANT TO MENTION HERE THAT FLAT WHICH WAS EARLIER PROPOSED TO BE PURCHASED BY SHRI VISHNU GUPTA WAS LATERON PU RCHASED BY HIS WIFE SMT SUNITA GUPTA. ALL THE PAYMENTS WERE MADE THROUG H CHEQUES ON DIFFERENT DATES, THEREFORE, ON CASH WAS ALSO PAID B Y SMT SUNITA GUPTA. THUS, THE ONLY INFERENCE WHICH CAN BE DRAWN ON THIS IMPUNGED LOOSE PAPER IS THAT, THE AO HAS MADE ADDITION UNDER DEEMED FICT ION AND WITHOUT HAVING ANY CORROBORATIVE EVIDENCE ON RECORD WHICH COULD ES TABLISH THAT THERE WAS EXCHANGE OF CASH FOR PURCHASE OF FLAT BY SHRI VISHN U GUPTA/ M/S VPS CONSULTANTS P. LTD. HONBLE SUPREME COURT IN THE CA SE OF CIT V/S KP IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 166 VARGHESE 131 ITR 547 (SC) HAS HELD THAT IN ABSENCE OF EVIDENCE THAT ACTUALLY ASSESSE PAID MORE AMOUNT THAN DECLARED IN REGISTERED DEED, NO ADDITION CAN BE MADE. IT IS SETTLED LAW THAT AO CANNOT MAKE ANY ADDITION MERELY ON BASIS OF SUSPICION, HOWEVER STRONG IT MAY BE. THE AO IS NOT JUSTIFIED IN PRESUMING CERTAIN FACTS WITHOUT HAVING ANYTHING TO CORROBORAT IVE. HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT C ANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HE LD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (954) 26 ITR 736 (SC). IT IS ALSO VERY IMPORTANT TO POINT OUT THAT NEITHER THE SELLER NOR THE BUYER HAS EVER ADMITTED THAT SUM OF RS. 5,00,000/- WAS PAID/RECEIVED. THUS, IN VIEW OF THE ABOVE DISCUSSIO N, I FIND NO MERIT IN THE ADDITION MADE BY THE AO ON THE BASIS OF ASSUMPTION AND PRESUMPTION AND WITHOUT ANY CORROBORATIVE EVIDENCE ON RECORD HAVING DIRECT NEXUS WITH THE IMPUNGED RECIPT/PAYMENT. FURTHER AS PER THE IMPUNGE D LOOSE PAPER OR RATHER SAY DUM DOCUMENT SUM OF RS. 10,00,000/- REPR ESENTS RECIPTS AND SUM OF RS. 5,00,000/- REPRESENTS PAYMENT, HOWEVER, THE AO HAS TREATED THE PAYMENT TO BE RECIPT. 4.12.6 IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE AO O N ACCOUNT OF ASSUMPTION AND PRESUMPTION BASIS AND IN ABSENCE OF ANY CONGENT EVIDENCE AMOUNTING TO RS. 15,00,000/- IS DELETED. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. 139. AGAINST THESE FINDINGS OF LD. CIT(A), THE DEP ARTMENT IS IN APPEAL. DURING THE COURSE OF HEARING, LD. COUNSEL F OR THE REVENUE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 167 TOOK US TO THE ASSESSMENT ORDER IN THE CASE OF SHRI VISHNU GUPTA, AND REFERRED TO THE LOOSE PAPER FOUND. HE CONTENDED THE FACT OF THE RECEIPT WAS MENTIONED IN THE LOOSE PAPER AND THEREF ORE, SUCH UNEXPLAINED RECEIPT OUGHT TO BE ADDED. 140. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CORRECT FACT OF THE TRANSACTION IS THAT SHRI VI SHNU GUPTA WAS A FINANCIAL ADVISOR TO THE ASSESSEE-COMPANY AND HAS B EEN PROVIDING FINANCIAL CONSULTANCY TO THE ASSESSEE COMPANY FROM PAST MANY YEARS. WHEN THE CONSULTANCY WORK GOT COMPLETED, M/S . VSP CONSULTANTS P LTD A COMPANY OF SH. VISHNU GUPTA RAI SED BILL OF RS. 62,92,160 ON THE ASSESSEE COMPANY FOR CONSULTANCY S ERVICES BEING PROVIDED BY SH. VISHNU GUPTA. FURTHER, SHRI. VISHNU GUPTA ISSUED TWO CHEQUES FOR PURCHASE OF FLAT. THE SAME FACT IS ALSO NARRATED IN THE LEDGER OF SH. VISHNU GUPTA IN THE BOOKS OF ASSE SSEE. THEREAFTER, SUM OF RS. 11,00,000 WAS RECEIVED BY THE APPELLANT FROM SH. VISHNU GUPTA ON 28.12.2011 OUT OF WHICH RS. 6,00,00 0 WAS RETURNED BACK THROUGH RTGS ON 28.12.2011. FURTHER S UM OF RS. 6,00,000 AND RS. 5,00,000 WERE ALSO RETURNED ON 24. 07.2013. THUS, THE ENTIRE RECEIPT FROM SH. VISHNU GUPTA WERE RETURNED BACK IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 168 BY ASSESSEE AS THE FLAT AT PROJECT ASTER ROYAL WAS NOT PURCHASED BY SHRI VISHNU GUPTA. THESE TANSACTIONS WERE THROUGH B ANKING CHANNELS; FURTHER THERE WAS NO ON-MONEY RECEIPT FRO M SHRI VISHNU GUPTA. THE BOOKING OF FLAT INFACT GOT CANCELLED AND THEREFORE THIS AMOUNT WAS RETURNED BACK. IT WAS SUBMITTED THAT, LA TER ON THE FLAT WAS PURCHASED BY WIFE OF SHRI VISHNU GUPTA, AND THE PAYMENT FOR SAME WAS MADE BY CHEQUES. THERE WAS NO EVIDENCE TO ESTABLISH ANY CASH RECEIPTS FROM SHRI VISHNU GUPTA. 141. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, AND GONE THROUGH THE ORDER OF LD. LOWER AUTHORITIES. DURING THE COUR SE OF SURVEY AT THE PREMISES OF THE ASSESSEE-COMPANY, PAGE NO. 42 O F LPS-16 WAS FOUND FROM BUSINESS PREMISES OF APPELLANT. THIS IMP UNGED LOOSE PAPER IS AN UNSIGNED COPY OF LEDGER ACCOUNT OF M/S VPS CONSULTANTS P. LTD. ON CONSIDERATION OF THE FACTS O N RECORD, IT IS CLEAR THAT M/S VPS CONSULTANTS P LTD. HAS BOOKED A FLAT IN THE NAME OF HIS DIRECTOR SHRI VISHU GUPTA AT PROJECT AS TER ROYAL OF APPELLANT COMPANY ON 20.04.2011 FOR A TOTAL SALE PR ICE OF RS. 51,00,000/-. SHRI VISHNU GUPTA WAS A FINANCIAL CONS ULTANT TO THE APPELLANT COMPANY FROM PAST MANY YEARS. WHEN THE CO NSULTANCY IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 169 WORK GOT COMPLETED M/S VSP CONSULTANTS P. LTD A COM PANY OF SHRI VISHU GUPTA RAISED BILL OF RS. 51,00,000 PLUS SERVI CE TAX TOTALLING TO RS. 62,92,160/- ON THE ASSESSEE COMPANY FOR CONSULT ANCY SERVICES BEING PROVIDED BY SHRI VISHNU GUPTA. THE PAYMENT OF CONSULTANCY FEES WAS MADE LATER ON BY BANKING CHANNEL. SINCE HU GE CONSULTACY FEES WAS DUE TO SHRI VISHNU GUPTA DURING THE PERIOD , INSTEAD OF INSISTING ON THE PAYMENT, A CREDIT IN ADVANCE USED TO BE GIVEN, ANTICIPATING THE PROFESSIONAL FEES. SO FAR THAT AMO UNT RECEIVED FOR BOOKING OF FLATS WAS CONCERNED, SAME WAS RECEIVED B Y BANKING CHANNELS AND THE SAME WAS RETURNED BY BANKING CHANN ELS WHEN THE BOOKING WAS CANCELLED. CONSULTANCY FEES WAS ALS O PAID BY CHEQUE. THE SAME FACTS ARE ALSO NARRATED BY SHRI VI SHNU GUPTA. THERE WAS NO CASH RECEIPT FROM SHRI VISHNU GUPTA. I N THE GIVEN FACTS, WE THEREFORE CONFIRM THE FINDINGS OF LD CIT( A). THIS GROUND OF THE REVENUE IS THEREFORE REJECTED. 142. NOW WE TAKE UP GROUND NO. 2 OF THE DEPARTMENT S APPEAL FOR A.Y. 2013-14 RELATING TO ADDITION OF RS. 1,20,00,00 0 AS UNACCOUNTED RECEIPTS UNDER LPS 1/2 PAGE NO. 68. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 170 143. THE FACTS RELATING TO THIS GROUND OF APPEAL AR E THAT DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF SHR I YASHOVARDHAN JAIN, A COMPUTER PRINTED SHEET WAS FOUND. IT WAS WR ITTEN IN THE SHEET CASH BHOPAL AGAINST VARIOUS DATES AS DR A ND AMOUNTS WERE WRITTEN ON CREDIT SIDE OF THIS DOCUMENT. THE T OTAL OF THIS SHEET WAS RS. 1,20,00,000. LD. AO CONTENDED THAT SINCE TH E DOCUMENT WAS FOUND AT THE RESIDENCE OF GENERAL MANAGER (FINA NCE), SHRI YASHOVARDHAN JAIN AND THE SAID DOCUMENT COULD NOT B E EXPLAINED, HENCE HE ADDED RS. 1,20,00,000. 144. AGAINST THIS ADDITION, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION, AT PAG E 71-92 BY DETAILED FINDINGS AS UNDER: 4.3.2 I HAVE CONSIDERED THE FACTUAL MATRIX OF THE CASE, W RITTEN SUBMISSIONS FILED AND ASSESSMENT ORDER. DURING THE COURSE OF SE ARCH PAGE NOS 68 & 54 OF LPS- WERE FOUND FROM RESIDENTIAL PREMISES OF S HRI YASHOVARDHAN JAIN, EMPLOYEE OF THE APPELLANT COMPANY. THE IMPUNGED LOO SE PAPER 68 OF LPS 1/2 , SCANNED ON PAGE NO 32 OF ASSESSMENT ORDER, IS A UNSIGNED LEDGER ACCOUNT WITH TITLE AG8 AND LOOSE PAPER 54 OF LPS 1/2 , SCANNED ON PAGE NO 35 OF ASSESSMENT ORDER, IS A DOCUMENT CONTAINING DETAILS OF DETAILS COLLECTION FOR MARCH 13. THE AO HAS ALLEGED THAT B OTH THE IMPUNGED LOOSE PAPERS REPRESENT UNACCOUNTED RECEIPTS AND PERTAINS TO THE APPELLANT COMPANY. HOWEVER, APPELLANT HAS STRONGLY CONTENDED THAT BOTH HAS BEEN IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 171 HELD BY THE HONBLE SUPREME COURT IN THE CASE OF DU RING THE COURSE OF SEARCH STATEMENT OF SHRI YASHOVARDHAN JAIN WAS ALSO RECORDED ON OATH WHEREIN HE WAS ALSO CONFRONTED WITH THESE LOOSE PAP ERS. SHRI YASHOVARDHAN JAIN SUBMITTED THAT THERE LOOSE PAPERS BELONGS TO M/S AG8 VENTURE LTD. AND HE IS UNAWARE OF FACT WHETHER THES E ARE ENTERED IN THE BOOKS OF ACCOUNT. ON THE CONTRACTRY APPELLANT HAS S TRONGLY CONTENDED THAT NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN BY TH E AO TO THE APPELLANT AND NO PERSON/EMPLOYEE IS ALLOWED TO TAKE ANY DOCUM ENT TO HIS HOUSE. I FIND FORCE IN THE CONTENTIONS OF THE APPELLANT THAT NO PROPER AND MEANINGFUL OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDED TO TH E APPELLANT. THIS IS ALSO AS ADMITTED FACT THAT STATEMENT OF SHRI YASHOVARDHA N JAIN WAS RECORDED BEHIND THE BACK OF THE APPELLANT. NO OPPORTUNITY OF CROSS-EXAMINATION WAS EVER ALLOWED TO THE ASSESSEE. THIS HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE KOLKATA IN CIVIL APPEAL NO. 248 OF 2 006 THAT IN ABSENCE OF CROSS-EXAMINATION OF PARTIES, THE ASSESS MENT PROCEEDINGS TO BE QUASHED. FURTHER, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL VS. MAKWANA [236 ITR 832 (GUJ )] AND JCIT & ORS. VS. GEORGE WILLIMSON (ASSAM) LTD. [258 ITR 126 (GUJ)] HAS HELD THAT STATEMENT OF THIRD PARTY CANNOT BE RELIED UPON WITH OUT HAVING ANY CORROBORATIVE EVIDENCE. SIMILARLY, HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELLARAM V/S. CIT 125 ITR 713 (SC) BHA S HELD THAT ADVERSE INFERENCE CANNOT TO DRAWN AGAINST THE ASSES SEE FROM THE STATEMENT OF THIRD PARTIES. SIMILARLY, LD. AR OF THE ASSESSEE HAS RELIED UPON DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S. INDRAJIT SINGH SURI (2013) 33 TAXMANN 281 (GUJ.) THAT WHERE ADDITIONS WERE ADDITION WERE MADE ON THE BASIS OF STATEMENT OF PERSONS WHO WERE NOT ALLOWED TO BE CROSS EXAMINED BY THE APPELLANT, ADDITION WERE NOT SUSTAINABLE. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 172 SINCE, THE IMPUNGED LOOSE PAPERS 68 & 54 OF LPS-1/2 WERE FOUND IN POSSESSION OF SHRI YASHOVARDHAN JAIN, THE APPELLANT CANNOT BE BLAMED TO BE OWNER OF THE TRANSACTION. AFTER CONSIDERING THE ENTIRE FACTUAL MATRIX AND EVI DENCE/MATERIAL ON RECORD INTER ALIA WRITTEN SUBMISSION FILED, I REACH TO CO NCLUSION THAT IMPUNGED ADDITION WAS MADE ON THE BASIS OF ASSUMPTION AND PR ESUMPTION WHICH NEITHER SUSTAINABLE ON FACTS NOR IN LAW. THE APPELL ANT WAS ALSO NOT GIVEN ANY OPPORTUNITY OF CROSS EXAMINATION. APPELLANT DUR ING APPELLATE PROCEEDINGS HAS STRONGLY CONTENTED THAT APPELLANT D ID NOT RECEIVE ANY SUCH CASH AND THE IMPUNGED LOOSE PAPER REPRESENT ROUGH W ORKING BY EMPLOYEE OF OTHER UNKNOWN PERSON. FURTHER, THE AO HAS ALSO F AILED TO BRING ON RECORD ANY COGENT EVIDENCE, CREATING DIRECT NEXUS OF RECEI PTS OF IMPUNGED CASH AS ALLEGED BY THE AO. THEREFORE, IN ABSENCE OF ANY COG ENT EVIDENCE HAVING DIRECT NEXUS WITH THE IMPUNGED TRANSACTION, THE SAI D IMPUNGAD PAPER I.E. PAGE NO 68 & 54 OF LPS-1/2 CANNOT BE USED AGAINST T HE ASSESSEE. 4.3.5 THIS IS AN UNDISPUTED FACT THAT NEITHER ANY INCRIMI NATING MATERIAL WAS FOUND OR SEIZED DURING SEARCH PROCEEDINGS NOR S HRI YASHOVARDHAN JAIN HAS EVER ADMITTED ABOUT RECEIPT OF RS. 1,20,00,000/ - AND RS. 1,04,88,000/- BY THE APPELLANT IN CASH. ON THE CONTRARY, NO INCRI MINATING DOCUMENT WAS FOUND SUGGESTING RECEIPT OF CASH AS MENTIONED ON TH ESE IMPUNGED LOOSE PAPERS. IN ABSENCE OF ANY CORROBORATIVE EVIDENCE TO PROVE THAT THERE WAS ANY EXCHANGE OF MONEY BY CASH, AO HAS NO LOCUS TO A SSUME THAT APPELLANT HAS RECEIVED SUM OF RS. 1,20,00,000/- AND RS. 1,04, 88,000/-. FURHER, THE AO HAS ALSO ALLEGED THAT AMOUNTS MENTIONED UNDER CO LUMN B REPRESENTS UNACCOUNTED RECEIPTS AND ASSESSEE HAS ALSO ADMITTED ONMONEY IN PROJECT HIGH LAND. HOWEVER, THE AO FAILED TO EXPLAIN ELABOR ATELY WHETHER THESE PAYMENTS ARE RELATED TO PROJECT HIGHLAND OR SOME OT HER PROJECT. FURTHER, THE ONMONEY RECEIVED IN PROJECT HAS ALREADY BEEN CONFIR MED VIDE PARA 4.13 OF THIS ORDER OF THIS ORDER. NEVERTHELESS, IT IS SETTL ED LAW THAT AO CANNOT MAKE ANY ADDITION MERELY ON BASIS OF SUSPICION, HOWEVER STRONG IT MAY BE. THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 173 AO IS NOT JUSTIFIED IN PRESUMING CERTAIN FACTS WITH OUT HAVING ANYTHING TO CORROBORATIVE. HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDI NGS, STILL ASSESSMENT CANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUES S WORK. IT HAS BEEN HELD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S C IT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVID ENCE. SIMILAR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (954) 26 ITR 736 (SC). 4.3.6 IN VIEW OF THE ABOVE DISCUSSION, MATERIAL EVIDENCE ON RECORD AND CASE LAWS CITED, FIRSTLY, THE AO OUGHT TO HAVE PROV IDED OPPORTUNITY OF CROSS EXAMINATION OF SHRI YASHOVARDHAN JAIN. SECONDLY, NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH SUGGESTING RE CEIPT OF CASE AS PER IMPUNGED LOOSE PAPER. THIRDLY, THE AO SHOULD HAVE B ROUGHT SOME INDEPENDENT EVIDENCE SUGGESTING EXCHANGE OF CASH OF RS. 1,20,00,000/- AND RS. 1,04,88,000/-. FOURTHLY, NONE OF THE LOOSE PAPER UNDER 54 & 68 OF LPS-1/3 WERE FOUND IN POSSESSION OF SHRI YASHOVARDH AN JAIN AND NOT IN POSSESSION OF APPELLANT. FIFTHLY, NONE OF THE LOOSE PAPER UNDER CONSIDERATION IS SIGNED BY THE APPELLANT OR ANY OF ITS AUTHORIZED REPRESENTATIVES. SIXTHLY, THE IMPUNGED LOOSE PAPER SHOULD BE SPEAKING NE WITH OUT HAVING ANY SECOND INTEREPRATION, WHICH IS NOT IN THE CASE OF APPELLAN T. MY FINDINGS ON THE ISSUE UNDER CONSIDERATION ARE BASED ON THE VARIOUS CONCLU SIONS DRAWN BY ME WHICH HAVE BEEN DISCUSSED IN THE ABOVE PARAS. THERE FORE, THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 1,20,00,000/- & RS. 1,04,88,000/- BEING ON SHEER ASSUMPTION AND PRESUMPTION BASIS. TH US, THE ADDITION MADE BY THE AO AMOUNTING TO RS. 1,20,00,000/ & RS. 1,04,88,000/- ARE DELETED. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 174 145. AGAINST THESE FINDINGS OF LD. CIT(A), THE REVE NUE IS IN APPEAL BEFORE US. LD. CIT(DR) SUBMITTED THAT SHRI YASHOVAR DHAN JAIN WAS GENERAL MANAGER (FINANCE) OF THE ASSESSEE COMPANY. AT HIS RESIDENCE THE DOCUMENT WAS FOUND. THE DOCUMENT SHOW ED CASH RECEIPTS ON DIFFERENT DATES, TOTALLING TO RS. 1,20 ,00,000/-. THE SAME WAS UNEXPLAINED, AND HENCE THE LD. AO WAS JUST IFIED IN MAKING THE ADDITION. 146. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DOCUMENT WAS A PRINTED SHEET. IT WAS UNSIGNED A ND IT WAS UNKNOWN AS TO WHO CREATED IT AND FOR WHAT PURPOSES IT WAS CREATED. THE DOCUMENT WAS FOUND FROM THE RESIDENCE OF SHRI Y ASHOVARDHAN JAIN AND IF HE WAS UNABLE TO EXPLAIN THE SAME, HOW IT CAN BE DEEMED TO BE THE UNACCOUNTED RECEIPTS OF THE ASSESS EE COMPANY. FURTHER, THE ENTRIES THEREIN ARE MERE DUMB, ONLY DA TE IS WRITTEN AND CASH BHOPAL IS WRITTEN. IT IS NOT EVEN CLEAR WHET HER IT WAS CASH BALANCE, CASH RECEIVED OR CASH PAID. WHO RECEIVED I T, FROM WHOM IT WAS RECEIVED, FOR WHAT PURPOSES THE CASH WAS RECEIV ED, IF ANY, WAS NEVER ENQUIRED. LD. COUNSEL FOR THE ASSESSEE THEREF ORE SUBMITTED THAT THE ENTRIES IN THESE DOCUMENTS WERE INCONCLUSI VE. HE RELIED ON IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 175 THE ORDER OF LD. CIT(A) AND CONTENDED THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 147. WE HAVE CONSIDERED THE RIVAL SUBMISSION, ORDER S OF LD. LOWER AUTHORITIES AND THE FACTS ON RECORD. WE FIND THAT A DOCUMENT WAS FOUND WITH THE HEADING AG8 BHOPAL AT THE RESIDENC E OF SHRI YASHOVARDHAN JAIN. THIS DOCUMENT CONTAINED CERTAIN ENTRIES AGAINST PARTICULAR DATES MENTIONING CASH BHOPAL. HOW LD. AO ALLEGED THE SAME TO BE CASH RECEIPT COULD NOT BE CO MPREHENDED. WHETHER THIS REPRESENTS CASH RECEIPT OR PAYMENT OR CASH BALANCE IS ALSO NOT CLEAR. THE DOCUMENT CAN AT BEST BE SAID TO BE A DUMB DOCUMENT IN ABSENCE OF ANY ENQUIRY BY THE LD. AO. W E FIND THAT ONCE SUCH DOCUMENT WAS FOUND FROM THE PREMISES OF O NE EMPLOYEE, LD AO OUGHT TO HAVE ENQUIRED AS TO THE CONTENTS OF THE DOCUMENTS. LD. AO MERELY CHOOSE TO MAKE HIS OWN CONCLUSIONS. G OING BY THE VERISON OF THE LD. AO HIMSELF, IT CANNOT BE KNOWN A S TO CASH WAS RECEIVED FROM WHOM AND FOR WHAT PURPOSES. WE THEREF ORE ARE IN FULL AGREEMENT WITH THE FINDING OF LD CIT(A) DELETING TH E ADDITION HOLDING THE SAID DOCUMENT AS A DUMB DOCUMENT. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 176 148. THEREFORE, GROUND NO. 2 FOR A.Y. 2013-14 OF TH E DEPARTMENTS APPEAL DESERVES TO BE REJECTED. 149. THE NEXT GROUND OF APPEAL IS GROUND NO. 3 OF D EPARTMENTS APPEAL FOR A.Y. 2013-14 AMOUNTING TO RS. 1,04,88,00 0 RELATING TO UNEXPLAINED MONEY MARKED AS LPS 1/2 PAGE 54. 150. THE FACTS OF THE PRESENT GROUND ARE THAT DURIN G THE COURSE OF SEARCH AT THE RESIDENCE OF SHRI YASHOVARDHAN JAIN, A COMPUTER PRINTED DOCUMENT TITLED AS DAILY COLLECTION SHEET WAS FOUND. THE DOCUMENT CONTAINED CERTAIN NOTINGS RELATED TO MARCH 2013 AND HAD TWO COLUMNS A & B. IN THIS SHEET, DATE WISE ENTRIES FROM 1 ST MARCH TO 17 TH MARCH WERE MADE. AMOUNT IN COLUMN A WAS 785.7 AND AMOUNT IN COLUMN B WAS 104.88. LD. AO CONCLUDED THA T B DENOTES UNACCOUNTED AND THEREFORE TREATED THIS AS UNACCOUNT ED RECEIVED OF THE ASSESSEE COMPANY. 151. AGAINST THIS ADDITION, AN APPEAL WAS FILED BE FORE LD. CIT(A). LD. CIT(A) DISCUSSED THIS ADDITION ALONGWITH ADDITION F OR LPS 1/2 PAGE 68, AND DELETED THE ADDITION. THE FINDINGS OF LD. C IT(A) ARE REPRODUCED ALONGWITH GROUND NO. 2 OF A.Y. 2013-14 A BOVE. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 177 152. AGAINST THIS, THE DEPARTMENT IS IN APPEAL BEFO RE US. BOTH THE PARTIES MADE SIMILAR SUBMISSIONS AS MADE IN GROUND NO. 2 ABOVE. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE NAME OF ASSESSEE COMPANY WAS NOWHERE WRITTEN ON THIS DOCUME NT. THIS DOCUMENT WAS NOT FOUND FROM THE POSSESSION OF ASSES SEE COMPANY. THEREFORE, LD. AO COULD NOT HAVE CO-RELATED THIS DO CUMENT WITH THE ASSESSEE COMPANY. 153. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, ORDE R OF THE LD. LOWER AUTHORITIES AND THE FACTS ON RECORD. THE DOCU MENT, LPS 1/2 PAGE NO. 54 WAS NOT FOUND FROM THE OFFICE OF ASSESS EE COMPANY. IT WAS FOUND FROM SHRI YASHOVARDHAN JAIN, WHO WAS AN E MPLOYEE OF ASSESSEE COMPANY. THERE WAS NO MENTION ON THIS DOCU MENT THAT IT IS RELATED TO ASSESSEE. IT IS A COMPUTER GENERATED SHEET, WHICH IS UNSIGNED. THE MAKER OF THIS DOCUMENT IS UNKNOWN AND THE PURPOSE FOR WHICH IT WAS MADE WAS UNKNOWN. THIS DOCUMENT, E VEN IF RELATED TO THE ASSESSEE COMPANY, CANNOT BE CORRELATED WITH ANY UNACCOUNTED CASH RECEIPTS. CERTAIN FIGURES WERE WRI TTEN ON THIS DOCUMENT AS A AND B. HOW LD. AO CONCLUDED THAT THES E FIGURES ARE IN LAKHS IS UNKNOWN. FURTHER, IT CANNOT BE CORRELAT ED AS TO FROM IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 178 WHOM IT WAS RECEIVED, FOR WHAT PURPOSE IT WAS RECEI VED, IF ANY. NO ENQUIRY WHATSOEVER WAS CONDUCTED BY THE LD. AO. THI S DOCUMENT MAY RAISE A SUSPICION THAT THERE IS SOME B PART, BUT THIS SUSPICION HAD TO BE ESTABLISHED BY CERTAIN CORROBORATIVE EVID ENCES TO BE PRODUCED BY THE DEPARTMENT TO ESTABLISH THIS ALLEGA TION. NO INQUIRY AS TO WHO CREATED IT, WHAT WAS THE PURPOSE, FROM WH OM IT WAS RECEIVED, HOW THE FIGURES ARE IN LAKHS HAS BEEN DON E. ARE THESE ESTIMATES OF RECEIPTS OR ACTUAL RECEIPTS, IF ANY. I N THE PRESENT SITUATION, THE DOCUMENT REMAINS A MERE DUMB DOCUMEN T AND NO ADDITION CAN BE MADE ON SAME. WE ARE IN AGREEMENT W ITH THE LD. CIT(A) THAT THIS DUMB DOCUMENT CANNOT BE A BASIS FO R MAKING ADDITION IN THE HANDS OF THE ASSESSEE. WE THEREFORE DISMISS GROUND NO. 3 OF THE DEPARTMENTS APPEAL FOR A.Y. 2013-14. 154. THE NEXT COMMON GROUNDS ARE GROUND NO. 4 DEPAR TMENTS APPEAL FOR A.Y. 2013-14 (RS. 1,28,64,700) AND GROUN D NO. 3 OF DEPARTMENTS APPEAL FOR A.Y. 2014-15 (RS. 5,40,06,7 95) WHICH RELATE TO UNACCOUNTED RECEIPTS. FURTHER, GROUND NO. 5 OF DEPARTMENTS APPEAL FOR A.Y. 2013-14 (RS. 55,24,697 ) AND GROUND NO. 4 OF DEPARTMENTS APPEAL FOR A.Y. 2014-15 (RS. 7,12,72,179) IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 179 RELATE TO UNACCOUNTED INVESTMENTS. THIS ALL GROUNDS ARE RELATED TO DOCUMENT LPS 1/2 PAGE NO. 14 TO 23 FOUND DURING THE COURSE OF SEARCH. 155. THE COMMON FACTS RELATED TO THESE GROUNDS OF A PPEAL ARE THAT DURING THE COURSE OF SEARCH AT THE RESIDENCE OF SHR I YASHOVARDHAN JAIN, LOOSE SHEET LPS 1/2 PAGE NO. 14 TO 23 WERE FO UND AND SEIZED. THIS SHEET WAS A COMPUTER GENERATED SHEET. THE COLU MNS THEREIN WERE SR. NO., DATE, NAME, NARRATION, DR., CR. AND R EMARK. THERE WERE 477 ENTRIES IN THE SHEET. THE COLUMN DATE WAS EMPTY. HOWEVER, AGAINST CERTAIN ENTRIES DATE WERE WRITTEN IN HANDWRITING. LD. AO CONCLUDED THAT THE ENTRIES ON THE DEBIT SIDE RELATED TO UNACCOUNTED INVESTMENTS AND ADDED THE SAME. FURTHER , ENTRIES ON THE CREDIT SIDE RELATED TO UNACCOUNTED RECEIPTS AND THEREFORE HE ADDED THE SAME. 156. AGAINST THESE ADDITIONS, THE ASSESSEE PREFERRE D AN APPEAL TO LD. CIT(A). LD. CIT(A) AT PAGES 105 TO 116 OF HIS O RDER, DELETED THE ADDITION, HOLDING AS UNDER: 4.4.2 AFTER CONSIDERING THE ENTIRE FACTUAL MATRIX AND EVI DENCE/MATERIAL ON RECORD INTER ALIA WRITTEN SUBMISSIONS FILED, I REAC H TO CONCLUSION THAT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 180 IMPUNGED ADDITION WAS MADE ON THE BASIS OF ASSUMPTI ON AND PRESUMPTION WHICH NEITHER SUSTAINABLE ON FACTS NO IN LAW. THE A O HAS REACHED TO CONCLUSION THAT APPELLANT RECEIVED RS. 1,28,64,700/ - AS UNACCOUNTED RECEIPTS AND HAS MADE PAYMENT OF RS. 55,24,697/- AS UNACCOUNTED INVESTMENT. APPELLANT DURING APPELLATE PROCEEDINGS HAS STRONGLY CONTENTED THAT APPELLANT NEVER RECEIVED/PAID ANY SUCH AMOUNT WHICH ARE DULY AUDITED U/S 44AB OF THE ACT. THE LOOSE PAPERS UNDER CONSIDE RATION ARE THE SAME WHICH WERE FOUND DURNG THE COURSE OF SURVEY IN AUGU ST 2013. THE AO FOUND THAT THE DOCUMENTS REPRESENT UNACCOUNTED CASH RECEI PT/UNACCOUNTED INVESTMENT OF THE APPELLANT COMPANY. HOWEVER, APPEL LANT HAS CONTENDED THAT NEITHER SUCH AMOUNT WAS RECEIVED BY THE APPELL ANT NOR WAS PAID, INFACT, THE LOOSE PAPERS WERE FOUND FROM POSSESSION OF SHRI YASHOVARDHAN JAIN WHO HAS LEFT COMPANY OF THE APPELLANT. APPELLA NT HAS ALSO PLACED RELIANCE ON THE DECISION OF HONBLE ITAT MUMBAI IN THE CASE OF STRAPTEX (INDIA) PVT. LTD. 84 ITD 320 (MUM) WHEREIN ITHAS BE EN HELD THAT THE PRESUMPTION U/S 132(4) IS APPLICABLE ONLY AGAINST T HE PERSON FROM WHOM POSSESSION THE BOOKS OF ACCOUNT OR OTHER DOCUMENTAR Y EVIDENCE WERE FOUND AND NOT AGAINST ANY OTHER PERSON. THESE DOCUMENTS HAVE BEEN SCANNED ON PAGE 38 TO 48 OF ASSESSMENT ORDER. ON A PLAIN AND CURSORY LOOK WOULD MAKE IT AMPLY CLE AR THAT THIS PAPER IS RELATING TO SOME LEDGER ACCOUNT STATEMENT VARIOUS CUSTOMERS. APPELLANT HAS ARGUED THAT THE SAID TRANSACTION HAS NEVER TAKE N PLACE THROUGH APPELLANT. FURTHER THE AO FAILED TO ESTABLISH DIREC T NEXUS AS TO WHEN THE AMOUNT WAS RECEIVED/PAID BY APPELLANT COMPANY AND F ROM WHOME AMOUNTS WERE RECEIVED AND TO WHOM AMOUNTS WERE PAID , THE AO HAS ALSO FAILED TO BRING ON RECORDED ANY COGENT EVIDENCE, CR EATING DIRECT NEXUS OF RECEIPT OF RS. 1,28,64,700/- AND PAYMENT OF RS. 55, 24,697/- BY THE APPELLANT. THEREFORE, IN ABSENCE OF ANY COGENT EVID ENCE HAVING DIRECT NEXUS WITH THE IMPUNGED TRANSACTION, THE SAID IMPUNGED PA PERS I.E. PAGE NOS 14 TO 23 OF LPS-1/2 FOUND FROM POSSESSION OF SHRI YASH OVARDHAN JAIN CANNOT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 181 BE USED AGAINST THE ASSESSEE. THESE LOOSE PAPERS AR E ROUGH JOTTING/SCRIBBLING AND ROUGH JOTTINGS WITHOUT DIREC T NEXUS WITH THE ASSESSEE CANNOT BE USED AGAINST HIM. THE AO HAS MADE ALLEGATION AGAINST THE ASSESSEE TH AT THE HAS RECEIVED THAT HE HAS RECEIVED RS. 1,28,64,700/- AND RS. 55,24,697/- WAS PAID AS PER DETAILS MENTIONED ON LOOSE PAPER 14 TO 23 OF LPS-1/ 2. IN ABSENCE OF ANY OF THE PERSON AS MENTIONED ON IMUNGED LOOSE PAPER, SHR I YASHOVARDHAN JAIN OR EITHER OF THE DIRECTOR OF APPELLANT COMPANY OR A NY INCRIMINATING DOCUMENT/PAPER TO ESTABLISH THAT ASSESSEE HAS RECEI VED SUM OF RS. 1,28,64,700/- AND HAS MADE PAYMENT OF RS. 55,24,697 /-. IN FACT THESE LOOSE PAPERS WERE FOUND FROM POSSESSION SHRI YASHWA RDHAN JAIN IN HIS STATEMENTS STATED HIS THESE PAPERS ARE OF HIS ONE O F THE CLIENT, WHOSE BOOKS WERE WRITTEN BY HIM. IT IS SETTLED LEGAL POSITION T HAT ONUS OF PROOF IS ON THE PERSON WHO MAKES ANY ALLEGATION AND NOT ON THE PERS ON WHO HAS TO DEFEND. AS PER LEGAL MAXIM AFFAIRMANTI NON NEGANTI INCUMBIT PROBATION MEANS BURDEN OF PROOF LIES UPON HIM WHO AFFIRMS AND NOT UPON HIM WHO DENIES. SIMILARLY AS PER DOCTRINE OF COMMON LAW INCUMBIT PROBATION QUI DIGIT NON QUI NEGAT. I.E. BURNED LIES UPON ONE WHO ALLEGES AND NOT UPON ONE WHO DENY THE EXISTENCE OF FACT. THE AO HAS FAIL ED TO DISCHARGE HIS ONUS OF PROOF ESPECIALLY WHEN ADDITION HAS BEEN MADE UND ER DEEMING FICTION. IN VIEW OF THIS LACUNE ON THE PART OF AO, IMPUNED ADDI TION IS LEGALLY NOT SUSTAINABLE. AS HELD IN THE CASE OF CIT V/S KP VARGHESE 131 ITR 574 (SC) BY HONBLE APEX COURT IN ABSENCE OF EVIDENCE THAT A CTUALLY ASSESSEE PAID MORE AMOUNT THAN DECLARED IN REGISTERED DEED, NO AD DITION CAN BE MADE. IN THE CASE OF BANASAL STRIP (P) LTD. & ORS VS. ACIT (2006) 99 ITD 177 (DEL) IT HAS BEEN HELD THAT:- IF AN INCOME NOT ADMITTED BY ASSESSEE IS TO BE AS SESSED IN THE HANDS OF THE ASSESSEE, THE BURDEN TO ESTABLISH THE INCOME IS CHA RGEABLE TO TAX IS ON THE AO. IN THE ABSENCE OF ADEQUATE MATERIAL AS TO MATUR E AND OWNERSHIP OF THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 182 TRANSACTIONS, UNDISCLOSED INCOME CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE MERELY BY ARITHMETICALLY TOTALLY VARIOUS F IGURES JOTTED DOWN ON LOOSED DOCUMENT 4.4.5 THIS IS UNDISPUTED FACT THAT NEITHER ANY INCRIMINAT ING MATERIAL WAS FOUND OR SEIZED DURING SEARCH PROCEEDINGS NOR THE P AYERS HAS EVER ADMITTED ABOUT RECEIPT OF RS. 1,28,64,700/- AND PAYMENT OF R S. 55,24,697/-. IN ADDITION, THE AO DID NOT MAKE ANY INDEPENDENT ENQUI RY ABOUT THE PAYERS OF THE UNACCOUNTED RECEIPTS/PAYMENT AND HAS MADE ALL A LLEGATIONS ON THE APPELLANT. HONBLE SUPREME COURT IN THE CASE OF LIC OF INDIA V/S INDIA V/S CIT (1996) 216 ITR 410 (SC) HAS HELD THAT THE LAW DOES NOT COMPEL A MAN TO PERFORM THE ACT WHICH HE CANNOT POSSIBLY PERFORM . IN THE PRESENT CASE, THE DOCUMENTS WERE FOUND IN POSSESSION OF APPELLANT. IT IS SHRI YASHOVRDHAN JAIN WHO HAS TO EXPLAIN THE ENTRIES ON THESE IMPUNG ED LOOSE PAPER AND CANNOT PUT BASELESS ALLEGATION ON THE APPELLANT. IN ABSENCE OF ANY CORROBORATIVE EVIDENCE TO PROVE THAT THESE WAS ANY EXCHANGE OF MONEY BY CASH/CHEQUE/KIND, AO HAS NO LOCUS TO ASSUME THAT AP PELLANT HAS RECEIVED RS. 1,28,64,700/- AND MADE PAYMENT OF RS. 55,24,697/-. IT IS STEELED LAW THAT AO CANNOT MAKE ANY ADDITION MERELY ON BASIS OF SUSPICION, HOWEVER STRONG IT MAY BE. THE AO IS NOT JUSTIFIED IN PRESUMPTION CERTAIN FACTS WITHOUT HAVING ANYTHING TO CORROBORAT IVE. HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT C ANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HE LD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (1954) 26 ITR 736 (SC). 4.4.6 IN VIEW OF THE ABOVE DISCUSSION, MATERIAL EVIDENCES ON RECORD AND CASE LAWS CITED, FIRSTLY, THE AO OUGHT TO HAVE DONE INDEPENDENT ENQUIRIES IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 183 FROM WHOSE AS ALLEGED THE APPELLANT HAS RECEIVED SU CH AMOUNTS. SECONDLY, SHRI YASHOVRDHAN JAIN SHOULD HAVE BEEN EXAMINED AND SHOULD HAVE BEEN LOOSE PAPERS. THIRDLY, THE LOOSE PAPER OR RATHER SA Y IT AS DUMB DOCUMENT SHOULD BE A SPEAKING ONE HAVING DIRECT NEXUS WITH T HE ASSESSEE, WHICH WAS NOT IN THE CASE OF APPELLANT. FORTHLY, NO INCRIMINA TING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH RELATING TO THE IMPUNGE D RECEIPTS. FIFTHLY, THE LOOSE PAPERS ARE UNDATED AND UNSIGNED. MY FINDINGS ON THE ISSUE UNDER CONSIDERATION DRAWN BY ME WHICH HAVE BEEN DISCUSSED IN THE ABOVE PARAS. THEREFORE, THE AO WAS NOT JUSTIFIED IN MAKING ADDIT ION OF RS. 1,28,64,700/- AS UNACCOUNTED CASH RECEIPT AND RS. 55,24,697/- AS UNACCOUNTED INVESTMENT. THUS, THE ADDITION MADE BY THE AO AMOUN TING TO RS. 1,28,64,700/- & RS. 55,24,697/- ARE DELETED. THEREFORE APPEAL ON THESE GROUNDS IS ALLOWED. SIMILAR FINDINGS WERE GIVEN IN A.Y. 2014-15 BY THE LD. CIT(A). 157. AGAINST THIS ORDER OF LD. CIT(A) THE DEPARTMEN T IS IN APPEAL. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT DURING T HE COURSE OF SEARCH AT THE RESIDENCE OF GENERAL MANAGER (FINANCE ), SHRI YASHOVARDHAN JAIN, THESE LOOSE SHEETS WERE FOUND MA RKED AS LPS 1/2 PAGE 14 TO 23. THE LOOSE SHEETS CONTAINED THE D ETAILS OF EXPENSES/ INVESTMENTS MADE AND THE DETAILS OF RECEI PTS. THESE TRANSACTIONS COULD NOT BE VERIFIED FROM THE BOOKS O F THE ASSESSEE- COMPANY. THE STORY OF THE ASSESSEE THAT THIS DOCUME NT WAS JUST A TYPED VERSION OF WHAT WAS FOUND DURING THE COURSE O F SURVEY IS A COOKED UP STORY. THUS, THE ADDITION WAS CLEARLY CAL LED FOR. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 184 158. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE ASSESSEE SUBMITTED THAT THE FACTS OF THIS DOCUMENT ARE THAT A LOOSE PAPER (LPS 1-9) WAS FOUND DURING THE COURSE OF SURVEY IN AUG. 2013 AT THE OFFICE OF THE ASSESSEE-COMPANY. THIS PAPER WAS HAND WRITTEN ROUGH NOTING. IT WAS FOUND FROM THE BAG OF ONE EMPLOYEE R EETA SHRIVASTAV. COPY OF THE SAID DOCUMENT IS PLACED IN THE WRITTEN SUBMISSION AS ANNEXURE 1 AT PAGES 201-215. IT WAS NOT CLEAR WHETH ER THESE ARE RECEIPTS OR PAYMENTS. IN MANY CASES, DATES WERE NOT MENTIONED. THE FIGURES RANGED FROM 1 TO 10,00,000. AT THAT TIM E, STATEMENT OF REETA SHRIVASTAV WAS RECORDED AND SHE SAID THAT THE SAID DOCUMENT RELATES TO SOME ROUGH NOTINGS RELATED TO ASSESSEE-C OMPANY. LATER, THE DEPARTMENT REQUIRED THE ASSESSEE TO GET THE SAI D DOCUMENT TYPED, WITH INCREASED TWO OR THREE ZEROS AS PER THE WILL OF THE IT AUTHORITIES. TRANSACTIONS WERE CLASSIFIED AS PAYMEN T OR RECEIPTS. THE TYPED VERSION OF THE SAID LOOSE PAPERS WITH SOM E MORE ZEROS WERE FOUND DURING SEARCH AT THE RESIDENTIAL PREMISE S OF YASHVARDHAN JAIN. THIS WAS MARKED AS LPS 1/2 PAGE 1 4-23. THIS FACT WAS BROUGHT TO THE NOTICE OF THE LD. AO AND HE ACCEPTED THIS FACT DURING THE ASSESSMENT. LD. COUNSEL FOR THE ASS ESSEE REFERRED TO IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 185 PAGES 2147 AND 2150 OF THE PAPER BOOK. HE TRIED TO COMPARE ANNEXURE 1 (PAGE 1 TO 9 FOUND DURING THE SURVEY) AN D LPS PAGE 14-23 TO DEMONSTRATE THAT THE ENTIRES THEREIN ARE S AME, EXCEPT 2-3 ZEROS. HE FURTHER SUBMITTED THAT ANALYSIS OF THE SA ID DOCUMENT CLEARLY DEMONSTRATES THAT THE DOCUMENT IS DUMB DOCU MENT. THE APPROACH OF ADDING 2 OR 3 ZEROS IN SOME CASES AND A DDING ON ZEROS IN SOME CASES IS TOTALLY AD-HOC. HE FURTHER SUBMITT ED THAT THE CLASSIFICATION OF DR. AND CR. IS ALSO TOTALLY AD-HO C. SALARY HAS BEEN WRITTEN ON RECEIPT SIDE. FURTHER, IN MOST ENTRIES D ATES ARE NOT MENTIONED, PARTICULARS ARE NOT MENTIONED, WORK IS N OT MENTIONED. LD. AO SIMPLISITER ADDED THE FIGURES MENTIONED IN T HE SHEET WITHOUT CORROBORATING ANY SINGLE ENTRY THEREIN. HE THEREFOR E CONTENDED THAT THE ADDITION IS UNCALLED FOR. 159. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, ORDE R OF THE LD. LOWER AUTHORITIES AND THE EVIDENCES ON RECORDS. ON GOING THROUGH THE PAPER FOUND DURING THE COURSE OF SURVEY U/S. 13 3A WHICH IS AT PAGE 201 TO 215 OF THE WRITTEN SUBMISSION FILED BY THE ASSESSEE AND THE LPS 1/2 PAGE 14-23 AS PLACED AT PB 1593-1611; W E FIND THAT THE DOCUMENT FOUND DURING THE SURVEY WAS A HANDWRIT TEN IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 186 DOCUMENT. THERE WAS NO CLASSIFICATION OF AMOUNT REC EIVED OR PAID. FURTHER, IT WAS JUST A ROUGH SCRUBBLING MADE BY ONE EMPLOYEE. THE DOCUMENT FOUND DURING THE COURSE OF SEARCH AT THE R ESIDENCE OF SHRI YASHOVARDHAN JAIN WERE COMPUTER GENERATED, CON TAINING THE SAME ENTRIES. HOWEVER, IN THIS CLASSIFICATION WAS D ONE, AND FURTHER AGAINST ONLY A VERY FEW ENTRIES SOME DATES WERE WRI TTEN. IN MANY ENTRIES 2 OR 3 ZEROS WERE ADDED. AS SUBMITTED BY LE ARNED COUNSEL FOR THE ASSESSEE THAT IT SEEMS THAT SHRI YASHOWARDH AN JAIN WAS TRYING TO COMPILE THE JOTTINGS FOUND DURING THE COU RSE OF SURVEY FOR FILING REPLY TO THE INCOME-TAX DEPARTMENT EXPLAININ G THE ENTRIES THEREIN. BEFORE HE COULD HAVE COMPLIED THE SAME, TH IS HALF WORKED DOCUMENT WAS FOUND AT HIS PREMISES DURING THE SEARC H. ASSESSEE INFACT BROUGHT THIS FACT, IN THE KNOWLEDGE OF LD. A O. BUT THE LD. AO MERELY IGNORED THIS FACT LD. AO DID NOT CONSIDER IT PROPER TO VERIFY ANY TRANSACTION OUT OF THE SAID SHEET, BUT MERELY A DDED THE FIGURES IN THE HANDS OF THE ASSESSEE. THE DOCUMENT LPS 1/2 PAGE 14 TO 23 IN OUR VIEW IS A MERE DUMB DOCUMENT AND NOTHING ELS E, CONSIDERING THE FACT THAT THE SAME IS JUST A HALF WORKED COMPIL ATION OF LOOSE SHEET FOUND DURING SURVEY U/S. 133A. MOST TRANSACTI ONS ARE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 187 UNDATED; IN MANY CASES THE PARTIES OR NARRATION ARE NOT WRITTEN. HOW SUCH A DOCUMENT CAN BE MADE A BASIS FOR MAKING ADDITION, MOREOVER WHEN THE ENTRIES THEREIN WERE NOT CORROBOR ATED BY THE DEPARTMENT. WE THEREFORE ARE IN FULL AGREEMENT WITH THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE.IN THE RESULT, THE GRO UND NO. 4 AND 5 OF DEPARTMENTS APPEAL FOR A.Y. 2013-14 AND GROUND NO. 3 AND 4 OF DEPARTMENTS APPEAL FOR A.Y. 2014-15 ARE HEREBY DIS MISSED. 160. THE NEXT GROUND IS GROUND NO. 6 OF DEPARTMENT S APPEAL FOR A.Y. 2013-14 AMOUNTING TO RS. 8,50,000 RELATING TO UNACCOUNTED RECEIPTS UNDER LPS A-2 PAGE NO. 21. THE ADDITION RE LATING TO THE UNACCOUNTED RECEIPTS ARE IN RESPECT TO LPS A-2 PAGE NO. 21 RELATING TO SMT. NIRMAL CHANDRA RS. 5,00,000 FOR THE CURRENT YEAR; AND LPS A-2 PAGE 13 IN RESPECT OF SHRI VINOD SEMWAL & SMT. ARCHANA SEMWAL RS. 3,50,000 RELATING TO CURRENT A.Y. THE IS SUE IS ALREADY COVERED BY OUR FINDINGS IN RELATING TO GROUND NO. 2 FOR A.Y. 2012-13 EARLIER. WE THEREFORE DISMISS THIS GROUND OF THE RE VENUES APPEAL. 161. THE NEXT GROUND OF APPEAL IS GROUND NO. 7 OF T HE DEPARTMENTS APPEAL FOR A.Y. 2013-14 RELATING TO DI SALLOWANCE U/S. 40A(3) OF RS. 60,000. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 188 162. THE FACTS RELATED TO THIS GROUND OF APPEAL ARE THAT ASSSESSEE COMPANY PURCHASED AN AGRICULTURAL LAND FROM ONE FAR MER SMT. RESHAM BAI, AT GRAM PHANDA. THE LAND WAS PURCHASED FOR RS. 36,60,000. OUT OF THE TOTAL CONSIDERATION, AN AMOUN T OF RS. 60,000/- ONLY WAS MADE IN CASH. LD. AO HELD THAT AL THOUGH THE TRANSACTION IS RECORDED IN THE BOOKS, YET THE EXPEN DITURE OF RS. 60,000 WAS IN CONTRAVENTION OF SECTION 40A(3) AND T HEREFORE SAME SHALL BE DISALLOWED. 163. AGAINST THIS ADDITION, ASSESSEE PREFERRED AN A PPEAL BEFORE LD. CIT(A). LD. CIT(A) HELD THAT THE PAYMENT WAS MADE I N CASH AS DEMANDED BY THE SELLERS. HE HELD THAT THE PAYMENT W AS MADE ON BUSINESS EXPENDIENCY AND APPLIED THE JUDGMENT OF TR IBUNAL INDORE, IN THE CASE OF TIRUPATI CONSTRUCTION VIDE ITA NO. 5 22/IND/2014 DATED 14.07.2016. 164. AGAINST THIS THE DEPARTMENT IS IN APPEAL. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT THE PAYMENT IS CLEARLY IN CO NTRAVENTION OF SECTION 40A(3) AND THEREFORE SAME WAS TO BE DISALLO WED. LD. COUNSEL FOR THE ASSESSEE HOWEVER SUBMITTED THAT THE TRANSACTION WAS GENUINE AND WAS DULY RECORDED IN THE BOOKS. FUR THER, HE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 189 CONTENDED THAT CASH WAS REQUIRED TO BE PAID IN THE PRESENT CASE AS THE SAME WAS DEMANDED BY THE SELLERS. HE RELIED ON THE JUDGMENT OF GURDAS GARG VS CIT IN TS-5374-HC-2015(P & H) AND FURTHER ON TIRUPATI CONSTRUCTION VS DCIT (TRIB. INDORE) COPY O F WHICH WAS PLACED AT PB 373-399. 165. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, ORDE R OF THE LD. LOWER AUTHORITIES AND THE CASE LAWS RELIED ON. WE A RE NOT IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE. WE H AVE ALREADY ACCEPTED THAT THE PAYMENT IF MADE ON BUSINESS EXPED IENCY IS ALLOWED WHILE DISCUSSING GROUND NO. 1 FOR A.Y. 2008 -09 OF THE DEPARTMENTS APPEAL. HOWEVER, IN THE PRESENT GROUND , THE ASSESSEE IS UNABLE TO SATISFY THE PARAMETER OF BUSINESS EXPE NDIENCY. THE ASSESSE HAD PAID RS. 36,60,000/- IN TOTAL. HOWEVER, HE CONTENDED THAT THE SELLER WAS UNAWARE OF THE ASSESSEE-COMPANY . HAD THAT BEEN THE CASE, ENTIRE PAYMENT WOULD HAVE BEEN IN CA SH. IT IS NOT POSSIBLE THAT FOR RS. 36,00,000 THE SELLER ACCEPTED THE PAYMENT BY CHEQUE AND FOR BALANCE RS. 60,000/- HE DEMANDED THA T PAYMENT BE MADE IN CASH. WE THEREFORE ALLOW THIS GROUND OF APP EAL OF THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 190 DEPARTMENTS APPEAL AND HOLD THAT THE LD. AO WAS JU STIFIED IN MAKING ADDITION OF RS. 60,000 U/S. 40A(3). 166. NOW WE TAKE UP GROUND NO. 8 OF DEPARTMENTS AP PEAL FOR A.Y. 2013-14 AMOUNTING TO RS. 1,34,78,580/- RELATING TO UNEXPLAINED EXPENDITURE AS PER LPS 1/2 PAGE NO. 51. 167. THE FACTS RELATING TO THIS GROUND OF APPEAL AR E THAT DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF THE GENERAL MANAGER (FINANCE) OF THE ASSESSEE-COMPANY, SHRI YASHOVARDHA N JAIN, A LOOSE PAPER SHEET MARKED AS LPS 1/2 PAGE 51 WAS FOUND AND SEIZED. THE PAPER WAS COMPUTER GENERATED AND WAS TITLED URGENT PAYMENT REQUIRED. FURTHER, DETAILS OF PROJECT/ PARTY WERE MENTIONED AT SR. NO. 1 TO 4 AND AMOUNTS WERE MENTIONED RESPECTIV ELY. A SUB- TOTAL OF RS. 94.78580 LAC WAS MADE AND LATER IT W AS MENTIONED 5. MR. NARESH BHANTIA (PARAS SINGH BHANTIA) RETURN OF CASH PART 40.00 LAC RS. 40.00 LACS UP TO 10.03.13. LD. AO CONCLUDE D THAT THESE ARE THE DETAILS OF UNACCOUNTED PAYMENTS, AND HE ADD ED BOTH RS. 94,78,580 AS MENTIONED IN SR. NO. 1 TO 4 AND ALSO R S. 40 ,00,000 AS MENTIONED IN SR. NO. 5. THUS HE MADE ADDITION OF RS . 1,34,78,580/- IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 191 168. AGAINST THE ADDITION, ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A). LD. CIT(A) VIDE HIS ORDER, AT PAGE 135 TO 145, DELETED THE ADDITION, HOLDING AS UNDER(RELEVANT EXTRACT):- 4.7.2 I HAVE CONSIDERED THE FACTUAL MATRIX OF THE CASE, WRITTEN SUBMISSION FILED AND ASSESSMENT ORDER. DURING THE COURSE OF SE ARCH PAGE NO. 51 OF LPS WERE FOUND FROM RESIDENTIAL PREMISES OF SHRI YASH OVARDHAN JAIN, EMPLOYEE OF THE APPELLANT COMPANY. THE IMPUNGED DOC UMENT IS TITLE AS URGENT PAYMENT REQUIRED. ON PERUSAL OF THIS LOOSE PAPER, PRIME- FACTS IT CAN BE SEEN THAT IT IS RELATING TO SOME REQUIREMENT OF FOUNDS. DURING THE COURSE OF SERACH STATEMENT OF SHRI YASHWARDHAN JAIN WAS AL SO RECORDED ON OATH WHEREIN HE WAS ALSO CONFRONTED WITH THESE LOOSE PAP ER BELONGS TO M/S AG8 VENTURES LTD. ON THE CONTRARY APPELLANT HAS STRONGL Y CONTENTED THAT ON OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN BY THE A O TO THE APPELLANT. I FIND FORCE IN THE CONTENTIONS OF THE APPELLANT THAT NO PROPER AND MENINGFULL OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDED TO TH E APPELLANT. THIS IS ALSO AN ADMITTED FACT THAT STATEMENT OF SHRI YASHVARDHAN JAIN WAS RECORDED BEHIND THE BACK OF THE APPELLANT. NO OPPORTUNITY OF CROSS-EXAMINATION WAS EVER ALLOWED TO THE ASSESSEE. THIS HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE KOLKATA IN CIVIL APPEAL NO. 248 OF 2 006 THAT IN ABSENCE OF CROSS- EXAMINATION OF PARTIES, THE APPEL LANT PROCEEDINGS TO BE QUASHED. FURTHER, THE HONBLE GUJRAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL VS. M.J. MAKWANA [ 236 ITR 832 (GUJ. )] AND JCIT & ORS. VS. GEORGE WILLIMSON (ASSAM) LTD. [258 ITR 126 (GUJ)] HAS HELD THAT STATEMENT OF THIRD PARTY CANNOT BE RELIED UPON WITHOUT HAVING ANY CORROBORATIVE EVIDENCE. SIMILARLY, HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELLARAM V/S. CIT 125 ITR 713 (SC) HAS HELD THAT ADVERSE INFERENCE CANNOT BE DRAWN AGAINST THE ASSES SEE FROM THE STATEMENT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 192 OF THIRD PARTIES. SIMILARLY, LD. AR OF THE ASSESSEE HAS RELIED UPON THE ADDITION DECISION OF JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT V/S. INDRAJIT SINGH SURI (2013) 33 TAXMANN 281 (GUJ.) THAT WHERE ADDITIONS WERE MADE ON THE BASIS OF STATEMENTS OF PERSONS WHO WERE NOT ALLOWED TO BE CROSS EXAMINED BY THE APPELLANT, ADDITIONS WERE NOT SUSTAINABLE. SINCE, THE IMPUNGED LOOSE PAPER 51 OF LPS-1/2 WERE FOUND IN POSSESSION OF SHRI YASHOVARDHAN JAIN, THE APPELLANT CANNOT BE BLA MED TO BE OWNER AND AUTHOR OF THE SAID LOOSE PAPER. AFTER CONSIDERING THE ENTIRE FACTUAL MATRIX AND EV IDENCE/MATERIAL ON RECORD INTER ALIA WRITTEN SUBMISSIONS FILED, I REACH TO CO NCLUSION THAT IMPUNGED ADDITION WAS MADE ON THE BASIS OF ASSUMPTION AND PR ESUMPTION WHICH NEITHER SUSTAINABLE ON FACTS NOR I LAW. THE APPELLA NT WAS ALSO NOT GIVEN ANY OPPORTUNITY OF CROSS EXAMINATION. APPELLANT DURING APPELLATE PROCEEDINGS HAS STRONGLY CONTENTED THAT THE LOOSE PAPER CLEARLY REPRESENTS ESTIMATE FOR REQUIREMENT OF FUNDS WAHICH MAY HAVE BEEN PREPARED BY SOME UNKNOWN PERSON/EMPLOYEE. FURTHER, THE AO FAILED TO BRING ON RECORD ANY COGENT EVIDENCE HAVING DIRECT NEXUS WITH THE IMPUNGED TRAN SACTION, THE SAID IMPUNGED PAPER I.E. PAGE NO 51 OF LPS-1/2 CANNOT BE USED AGAINST THE ASSESSEE. 4.7.5 THIS IS AN UNDISPUTED FACT THAT NEITHER ANY INCRIMI NATING MATERIAL WAS FOUND OR SEIZED DURING SEARCH PROCEEDINGS NOR T HE PAYER HAS EVER ADMITTED ABOUT PAYMENT OF RS. 1,34,78,580/- BY THE APPELLANT. IN ABSENCE OF ANY CORROBORATIVE EVIDENCE TO PROVE THAT THERE W AS ANY EXCHANGE OT MONEY BY CASH, AO HAS NO LOCUS TO ASSUME THAT APPEL LANT HAS MADE UNEXPLAINED EXPENDITURE OF RS. 1,34,78,580/-. IT IS SETTLED LAW THAT AO CANNOT MAKE ANY ADDITION MERELY ON BASIS OF SUSPICION, HOWEVER STRONG IT MAY BE. THE AO IS NOT JUSTIFIED IN PRESUMING CERTAIN FACTS WITHOUT HAVING ANYTHING TO CORROBORAT IVE. HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 193 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT C ANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HE LD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (954) 26 ITR 736 (SC). 4.7.5 IN VIEW OF THE ABOVE DISCUSSION, MATERIAL EVIDENCES ON RECORD AND CASE LAWS CITED, FIRSTLY, THE AO OUGHT TO HAVE PROV IDED OPPORTUNITY OF CROSS EXAMINATION OF SHRI YASHOVARDHAN JAIN. SECONDLY, TH E AO SHOULD HAVE EXAMINED THE PERSON WHOSE NAMES ARE MENTIONED ON TH E LOOSE PAPER. THIRDLY, THE AO SHOULD HAVE BROUGH SOME INDEPENDENT EVIDENCE SUGGESTING EXCHANGE OF CASH OF RS. 1,34,78,580/-. FOURTHLY, TH E IMPUBGED LOOSE PAPER 51 & OF LPS-1/2 WERE FOUND IN POSSESSION OF SHRI YA SHOVARDHAN JAIN AND NOT IN POSSESSION OF APPELLANT. FIFTHLY, THE LOOSE PAPER UNDER CONSIDERATION IS SIGNED BY THE APPELLANT OR ANY OF ITS AUTHORIZED REPRESENTATIVE. SIXTHLY, THE IMPUNGED LOOSE PAPER SHOULD BE SPEAKING ONE WIT HOUT HAVING ANY SECOND INTEREPRATION, WHICH IS NOT IN THE CASE OF A PPELLANT. SEVENTHLY, THE LOOSE PAPER IS UNDATED, UNSIGNED. MY FINDINGS ON TH E ISSUE UNDER CONSIDERATION ARE BASED ON THE VARIOUS CONCLUSIONS DRAWN BY ME WHICH HAVE BEEN DISCUSSED IN THE ABOVE PARAS. THEREFORE, THE AO WAS NOT JUSTIFIES IN MAKING ADDITION OF RS. 1,34,78,580/- BEING ON SHEER ASSENTING AND PRESUMPTION BASIS. THUS, THE ADDITION MADE BY THE A O AMOUNTING TO RS. 1,34,78,580/- IS DELETED. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. 169. AGAINST THIS, THE DEPARTMENT IS IN APPEAL. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT THE LOOSE PAPER WAS FOUND FR OM THE PREMISES OF THE GENERAL MANAGER (FINANCE) OF THE AS SESSEE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 194 COMPANY. THE DOCUMENT CLEARLY MENTIONED THAT THEY A RE THE DETAILS OF URGENT PAYMENTS. THE DOCUMENTS MENTIONED THE NAM E OF THE PARTY/ PROJECTS AND THE AMOUNTS. THUS, THE LD. AO W AS JUSTIFIED IN MAKING THE ADDITION BASED ON THIS DOCUMENT. 170. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS DOCUMENT WHICH IS A COMPUTER GENERATED DOCUMEN T IS A ROUGH NOTING RELATING TO SOME REQUIREMENTS OF THE FUNDS F OR MAKING PAYMENT TO THE PARTIES. THE DOCUMENT ITSELF SPEAKS FOR ITSELF THAT IT RELATES TO REQUIREMENTS OF FUNDS. FURTHER, HE SUBMI TTED IT MIGHT HAVE BEEN CREATED BY SOME EMPLOYEE TO ENSURE THAT F UNDS ARE AVAILABLE WITH THE ASSESSEE COMPANY TO MAKE PAYMENT S. THE MAKER OF THE DOCUMENT AND THE PURPOSE FOR WHICH IT WAS MA DE IS NOT KNOWN. HE FURTHER CONTENDED THAT NO ENQUIRY WAS MAD E BY THE DEPARTMENT REGARDING THE CONTENTS OF THE DOCUMENT F ROM SHRI YASHOWARDHAN JAIN. HE FURTHER SUBMITTED THAT IN THE FIRST PART OF THE DOCUMENT, NO DATE IS MENTIONED. MERELY NAME AND AMOUNTS ARE MENTIONED. IN THE SECOND PART, IT IS MENTIONED RS. 40 LAC UPTO 10.03.13. IT CLEARLY SHOWS THAT IT IS AN ESTIMATE OF FUND REQUIREMENTS. HE STRONGLY RELIED ON THE ORDER OF LD . CIT(A). IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 195 171. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, ORDE R OF THE LD. LOWER AUTHORITIES AND THE EVIDENCES ON RECORD. ON G OING THROUGH THE ALLEGED DOCUMENT, WE FIND THAT THIS DOCUMENT DO ES NOT RELATE TO PAYMENTS MADE BY THE ASSESSEE BUT TO THE REQUIREMEN T OF FUNDS FOR MAKING PAYMENTS. IT SEEMS TO BE SOME ROUGH JOTTINGS ANTICIPATING MONEY TO BE RECEIVABLE UP TO 10.03.13 SO THAT THE URGENT PAYMENTS COULD BE MADE. THERE IS NO EVIDENCE ON REC ORD THAT THE MONEY WAS RECEIVED OR THAT THE PAYMENT WAS MADE. TH E ROUGH NOTINGS ON THIS DOCUMENT WERE NEVER ENQUIRED BY THE LD. AO. ONCE THE ROUGH NOTING IN THIS DOCUMENT IS NOT CORROBORAT ED, HOW IT CAN BE USED AGAINST THE ASSESSEE. EVEN IT WAS NEVER ENQ UIRED INTO, AS TO WHO CREATED THIS DOCUMENT AND FOR WHAT PURPOSES IT WAS MADE. THIS DOCUMENT, AS SUCH IS A MERE DUMB DOCUMENT. OUT OF THE 5 ENTRIES, 4 ENTRIES ARE WITHOUT ANY DATE. FURTHER, T HE ENTRY ONLY SPEAKS OF SOME AMOUNT TO BE RETURNED UPTO 10.03.13. IT IS NOT CLEAR WHETHER THIS AMOUNT WAS TO BE RETURNED TO THE ASSES SEE OR BY THE ASSESSEE. WHETHER THIS AMOUNT WAS RETURNED SUBSEQUE NTLY OR NOT. SAME HAS NOT BEEN ENQUIRED INTO. WE THEREFORE DO NO T FIND ANY IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 196 INFIRMITY IN THE FINDINGS OF LD. CIT(A) IN TREATING THIS DOCUMENT AS A DUMB DOCUMENT. LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 172. IN THE RESULT THIS GROUND OF APPEAL OF THE DEP ARTMENT IS DISMISSED. 173. NOW WE TAKE UP GROUND NO. 11 OF THE DEPARTMENT S APPEAL FOR A.Y. 2013-14 AMOUNTING TO RS. 1,00,000 IN RESPECT O F LPS A-13 RELATING TO ON-MONEY IN RESPECT OF 21 REGISTRIES FO UND FROM THE OFFICE ASSESSEE-COMPANY AND 6 REGISTRIES FOUND FROM THE SI TE OFFICE OF AAKRITI AQUA CITY. 174. THE FACTS ARE THAT DURING THE CURRENT YEAR, A SSESSEE PURCHASED FOLLOWING LANDS FROM RESPECTIVE PERSONS: LPS NAME OF FARMERS SITUATED AT HECTRE/ACR E OF AGRI. LAND SOLD AND DATE OF REGISTRY REGISTRY AMOUNT (RS.) MARKET VALUE/COLLE CTOR RATE (RS.) ADDITION MADE BY A.O. REMARKS AS PER A.O. A-19 67 TO 81 SMT. BINDA BAI W/O. SHRI RAMSINGH R/O. VILL. KHARKHEDI TEH. HUZUR, BHOPAL PHANDA KALAN 0.405 HECTRE 1.00ACRE 16.04.2012 14,00,000 PB 1637- 1665 48,60,000 1,00,000 SHRI RAMSINGH HUSBAND OF SMT. BINDA BAI ATTENDED ON 11-04-2014 AND RECORDED STATEMENT THAT THE RECEIVED RS. 1,00,000 IN CASH IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 197 A- 20 125 TO 135 1. SMT. SARJU BAI W/O. SHRI RATAN SINGH 2. SHRI DEVI SINGH S/O RATAN SINGH 3. SHRI NARAYAN SINGH S/O. SHRI GURUBAKSH PHANDA 5.145 HECTRE 12.71ACRES 07.05.2012 8,13,08,000 PB 1666- 1707 8,13,08,000 2,00,000 SHRI NARAYAN SINGH AND DEVI SINGH ATTENDED AND STATEMENT RECORDED ON 05/08-02-2016 THAT THEY RECEIVED RS. 1,00,000 EACH IN CASH A-31 186 TO 195 1.RAM SINGH 2.SHRI CHANDRA SINGH BOTH ARE S/O. BAHGIRATH 3.SHRI SANTOSH KUMAR S/O. CHAINSUNGH PHANDA KALAN 1.549 HECTRE 6.29 ACRES 14.05.2012 3,77,00,000 PB 1708- 1746 3,77,00,000 1,00,000 SHRI CHANDRA SINGH ATTENDED AND STATEMENT RECORDED ON 26.02.2015, THAT HE RECEIVED RS. 1,00,000 IN CASH A- 19 46 TO 66 1. SMT. HARKUBAI W/O. LAT SHRI GURUBAKASH 2. SH. BHAGWAN SINGH 3. SMT. SORAM BAI 4.SMT. SUGAN BAI D/O. LATE GURUBAKASH SINGH PHANDA KALAN 1.549 HECTRE 6.29 ACRES 11.06.2012 1,66,72,000 PB 924- 972 1,66,72,000 SHRI BHAGAN SINGH AND SMT. SORAM BAI ATTENDED ON 4/8-02/2016, THEY ADMITTED THAT ALL THE PAYMENTS WERE RECEIVED THROUGH CHEQUES. A- 19 19 TO 45 SMT. GENDKUWAR W/O. VIKRAM SINGH PHANDA KALAN 2.416 HECTRE 5.79 ACRES 24.07.2012 2,70,12,000 PB 1747- 1790 3,08,04,000 4,50,000 SHRI ABHJEET SINGH S/O. OF LATE SHRI LATE SHRI GENDKUWAR RECORDED STATEMENT ON 26.02.2015 THAT HE RECEIVED RS. 4,50,000 IN CASH A-18 01 TO 17 SHRI GOVIND SINGH S/O. SH. SHAMBULAL PHANDA KALAN 1.779 HECTRE 4.40 1,75,20,000 PB 973- 1003 2,12,76,000 5,00,000 SHRI GOVIND SINGH STATEMENT RECORDED ON 26.02.2016 THAT HE RECEIVED RS. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 198 ACRES 13.09.2012 5,00,000 IN CASH TOTAL AMOUNT 13,50,000 LD. AO RELIED ON THE STATEMENTS OF THE PARTIES AND CONTENDED THAT ON-MONEY WAS PAID BY THE ASSESSEE-COMPANY. HE THERE FORE MADE ADDITION OF RS. 1,00,000 IN RESPECT OF ON-MONEY. 175. AGAINST THIS ADDITION, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION AS PER THE FINDING GIVEN AT PAGES 183 TO 189 OF HIS ORDER, HOLDING AS UNDER (EX TRACTED): 4.10.8 IN VIEW OF THE ABOVE, FIRSTLY, THE AO OUGHT TO HAVE GIVEN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT. SECONDLY, TH E AO SHOULD HAVE BROUGHT EVIDENCE HAVING DIRECT NEXUS WITH THE ALLEGED ON MO NEY PAYMENT OF RS. 1,00,000/- (CORRECTLY RS. 13,50,000/-). THIRDLY, TH E ADDITION MADE BY THE AO ARE ON ASSUMPTION AND PRESUMPTION BASIS. FUTHER, TH E LOOSE PAPERS WERE FOUND IN POSSESSION OF SHRI YASHOVRDHAN JAIN AND NO T FROM APPELLANT. FIFTHLY, STATEMENTS WERE RECORDED BY THE THEN ADIT WHO WAS NOT APPROPRIATE JURISDICTIONAL OFFICER. SIXTHLY, ALL TH E SELLERS EXCEPT SMT BINDA BAI FILRED AFFIDAVITS STATING THAT ALL THE PAYMENTS MADE FOR PURCHASE OF LAND ARE DULY RECORDED IN BOOKS OF ACCOUNT. MOST IMPORTA NTLY, SHRI NARYAN SINGH, SHRI DEVI SINGH, SHRI CHANDRA SINGH, SMT GENDHKUWAR AND SHRI GOVIND VIDE THEIR AFFIDAVITS WHICH ARE ON RECORD HAS STATE D THAT THE STATEMENT GIVEN BEFORE THE INCOME TAX AUTHORITIES WAS GIVEN UNDER P RESSUR. MY FINDINGS ARE BASED ON THE FINDINGS GIVEN IN ABOVE MENTIONED PARA S. THUS, KEEPING IN IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 199 VIEW THE ABOVE DISCUSSION AND JUDICIOUSLY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELLARAM (SUPRA), THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 1,00,00 0/- (CORRECTLY RS. 13,50,000/-). THUS, ADDITION MADE BY THE AO AMOUNTI NG TO RS. 1,00,000/- IS DELETED BEING ON THE BASIS OF STATEMENT RECORDED BEHIND THE BACK OF APPELLANT AND NO MEANINGFUL OPPORTUNITY OF CROSS EX AMINATION WAS PROVIDED. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. 176. AGAINST THIS, THE DEPARTMENT IS IN APPEAL. LD. COUNSEL FOR THE REVENUE CONTENDED THAT THE LD. AO WAS JUSTIFIED IN MAKING THE ADDITION FOR ON-MONEY. HE RELIED ON THE FINDING OF LEARNED ASSESSING OFFICER. 177. ON THE CONTRARY, AT THE OUSET, LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE FINDING OF LEARNED CIT (A) AND SUBMIT TED THAT ALTHOUGTH THE LD. AO MENTIONED OF ON-MONEY PAID BY ASSESSEE COMPANY AMOUNTING TO RS. 13,50,000 IN THE CHART AT PAGE 99 OF ASSESSMENT ORDER, HOWEVER HE ADDED RS. 1,00,000 ONL Y DURING THE CURRENT YEAR. THE BASIS OF THIS DIFFERENCE WAS UNKN OWN. THE REGISTRIES WERE FOUND AT THE PREMISES OF THE ASSESS EE DURING THE COURSE OF SEARCH. NO INCRIMINATING MATERIAL SHOWING ANY ON-MONEY WAS FOUND. THE TRANSACTIONS MENTIONED IN THE SALE D EEDS WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS. ALL THE PAYMENTS WERE THROUGH IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 200 BANKING CHANNELS. THUS, NO ADDITION FOR ON-MONEY PA YMENT CAN BE MADE IN THESE PROCEEDINGS U/S. 153A R/W SECTION 143 (3). 178. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, OR DERS OF THE LD. LOWER AUTHORITIES AND THE EVIDENCES ON RECORD. WE F IND THAT THE VERY BASIS OF THE ADDITION IS SOME STATEMENTS RECOR DED OF THE SELLERS. HOWEVER, INSIPTE OF BEING ASKED FOR, LD. AO DID NOT PROVIDE AN OPPORTUNITY TO CROSS-EXAMINE THE SELLERS. THUS, THE STATEMENTS OF THE SELLERS CANNOT BE RELIED ON. FURTHER, THE STATE MENTS ARE NOT CORROBORATED BY BRINGING ANY MATERIAL ON RECORD. A MERE STATEMENT OF THIRD PERSON CANNOT BIND THE ASSESSEE, UNLESS IT IS CORROBORATED BY ANY EVIDENCE ON RECORD. FURTHER, LD. AO RELIED O N THE BANK STATEMENTS OF THE SELLERS. HOWEVER, BANK STATEMENT OF NOT EVEN A SINGLE SELLER WAS EVER BROUGHT ON RECORD TO ESTABLI SH THAT CASH WAS DEPOSITED IN THEIR BANK ACCOUNTS. EVEN IN THE PAPER BOOK FILED BY THE DEPARTMENT, SAME HAS NOT BEEN FILED. THUS, NO R ELIANCE CAN BE PLACED ON SAME. IN RESPECT OF SMT. BINDABAI, WE CAN NOT RELY ON STATEMENT OF HER HUSBAND WHO WAS NOT A PARTY TO THE TRANSACTION. FURTHER, THERE WERE CONTRADICTIONS IN HIS STATEMENT S ALSO AS POINTED BY THE LD. COUNSEL FOR THE ASSESSEE. IN RESPECT OF SMT. SARJU BAI, IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 201 SHRI DEVISINGH AND SHRI NARAYAN SINGH, BOTH OF THEM LATER DENIED ON AFFIDAVIT THAT ON-MONEY WAS RECEIVED. THUS THEIR STATEMENT SIMPLICITOR CANNOT BE RELIED ON. SIMILARLY, IN RESP ECT OF SHRI RAM SINGH, SHRI CHANDAR SINGH AND OTHERS, SHRI CHANDAR SINGH LATER DENIED TO HAVE RECEIED ON-MONEY IN AFFIDAVIT. IN RE SPECT OF SMT. GENDKUNWAR, STATEMENT OF SMT. GENDKUNWAR WAS NOT RE CORDED. HER SONS STATEMENT WOULD NOT HAVE ANY EVIDENTIARY VALUE. FURTHER, SMT. GENDKUNWAR FILED AN AFFIDAVIT, STATING THAT NO ON-MONEY WAS RECEIVED BY HER. THUS, CONSIDERING ALL THE FACTS AN D CIRCUMSTANCES OF THE CASES, WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF LD. CIT(A). IN THE RESULT, THIS GROUND OF THE REVENUE IS DISMIS SED. 179. NOW WE TAKE UP COMMON GROUNDS GROUND NO. 13 OF THE DEPARTMENTS APPEAL FOR A.Y. 2013-14 (RS. 10,00,000 ) AND GROUND NO. 8 OF DEPARTMENTS APPEAL FOR A.Y. 2014-15 (RS. 40,00,000) RELATING TO UNACCOUNTED RECEIPTS FROM SHRI VISHNU G UPTA OF M/S. VSP CONSULTANTS P LTD. 180. THE FACTS RELATING TO THESE GROUNDS OF APPEAL ARE THAT DURING THE COURSE OF SURVEY U/S. 133A AT THE PREMISES OF T HE ASSESSEE COMPANY IN AUGUST 2013, A DOCUMENT LPS 16 PAGE 39 T O 42 WAS IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 202 FOUND AND IMPOUNDED. THESE PAPERS CONTAINED THE DET AILS OF PURCHASE OF ONE FLAT ASTER ROYAL 01/ 302 BY SHRI VI SHNU GUPTA. AT THE BOTTOM OF PAGE NO 40 OF LPS 16, IT WAS WRITTEN ON HAND STICKER PL CREDIT RS. 10 LACS TO ASTER OF MR. VISHNU GUPTA DATED 09.06. LD. AO CONCLUDED THAT ON 09.06.2012 AN AMOUNT OF RS . 10 LAKHS WAS RECEIVED FROM SHRI VISHNU GUPTA AGAINST THE PUR CHASE OF THE FLAT. SIMILARLY THERE WAS ANOTHER HAND STICKER WITH A NOTING PL CREDIT RS. 40.00 L TO ASTER OF MR. GUPTA DATED 18 .05.2013. LD. AO CONCLUDED THAT ON 18.05.2013, AN AMOUNT OF RS. 4 0 LAKHS WAS RECEIVED FROM SHRI VISHNU GUPTA AGAINST THE PURCHAS E OF FLAT. SINCE BOTH THESE RECEIPTS WERE NOT RECORDED IN THE BOOKS, LD. AO ADDED RS. 10 LAKHS IN A.Y. 2013-14 AND RS. 40 LAKHS IN A. Y. 2014-15. 181. AGAINST THIS ADDITION, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A). LD. CIT(A) IN PAGES 203 TO 206, DELETED THE ADDITION, HOLDING AS UNDER: IT IS ALSO SETTLED LAW THAT AO CANNOT MAKE ANY ADDI TION MERELY ON BASIS OF SUSPICION, HOWEVER STRONG IT MAY BE. THE AO IS NOT JUSTIFIED IN PRESUMING CERTAIN FACTS WITHOUT HAVING ANYTHING TO CORROBORAT E. HONBLE SUPREME COURT IN THE CASE OF DJAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT CANNOT BE MADE ON THE BASIS OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 203 IMAGINATION AND GUESS WORK. IT HAS BEEN HELD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG COURT IN THE CASE OF EVIDENCE. SIMILAR VIEWS HAVE B EEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (1954) 26 ITR 736 (SC). IT IS ALSO VERY IMPORTANT TO POINT OUT THAT NEITHER THE SELLER NOR THE BUYER HAS EVER ADMITTED THAT SUM OF RS. 10,00,000/- WAS PAID/RECEIVED. THUS, IN VIEW OF THE ABOVE DISCUSSION, I FIND NO ME RIT IN THE ADDITION MADE BY THE AO ON THE BASIS OF ASSUMPTION AND PRESUMPTIO N AND WITHOUT ANY CORROBORATIVE EVIDENCE ON RECORD HAVING DIRECT NEXU S PAPER SUM OF RS. 10,00,000/- REPRESENT ROUGH JOTTINGS/SCRIBBLING MAD E BY SOME PRESON/EMPLOYEE. 4.12.5 IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE AO I S NO ACCOUNT OF ASSUMPTION AND PRESUMPTION BASIS AND IN ABSENCE OF NAY CONGENT EVIDENCE HAVING CIRECT NEXUS OF RECEIPT OF RS. 10,00,000/-. IT IS ALSO IMPORTANT TO MENTION THAT THE FLAT WHICH WAS PROPOSED WAS NOT PU RCHASED BY SHRI VISHNU GUPTA, THEREFORE, NO PRUDENT PERSON WILL PEY HUGE SUM OF RS. 10,00,000/- FOR NO CAUSE. THUS, THE AO WAS NOT JUST IFIED IN TREATING ROUGH JOTTINGS AND SCRIBBLING AS RECEIPTS OF APPELLANT, T HEREFORE, THE ADDITION AMOUNTING TO RS.10,00,000/- ON THIS ACCOUNT IS DELETED. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. SIMILAR FINDINGS WERE GIVEN IN A.Y. 2014-15. 182. AGAINST THIS, THE DEPARTMENT IS IN APPEAL BEFO RE US. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT LPS 16 PAGE 39 TO 42 WERE BOOKING FORM FOR THE PURCHASE OF FLAT. SHRI VISHNU GUPTA BOOKED A FLAT ASTER ROYAL 01/ 302. IN THIS, CLEARLY AN ADVIS E OF RECEIPT OF RS. 10 LAKHS AND RS. 40 LAKHS FROM SHRI VISHNU GUPTA WA S RECORDED ON IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 204 DIFFERENT DATES. THEREFORE, LD. AO WAS JUSTIFIED IN MAKING ADDITION OF UNACCOUNTED RECEIPTS IN THE HANDS OF ASSESSEE CO MPANY. 183. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FINDING OF LD. CIT (A) AND SUBMITTED THAT THE LD CI T(A) WAS JUSTIFIED IN DELETING THE ADDITION. 184. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, ORDE RS OF THE LD. LOWER AUTHORITIES AND THE EVIDENCES ON RECORD. WE F IND THAT APART FROM A ROUGH JOTTING PL CREDIT RS. 10 LACS.... AN D PL CREDIT RS. 40.00 L..... THE LD. AO HAS NOT RELIED ON ANY OTHE R EVIDENCE TO HOLD THAT ON-MONEY WAS RECEIVED FROM SHRI VISHNU GUPTA. THIS FACT THAT SHRI VISHNU GUPTA WAS PROVIDED FINANCIAL SERVICES T O ASSESSEE- COMPANY AND HUGE AMOUNT WAS PAYABLE TO HIM IS VERIF IABLE BY THE FACT THAT BILL OF RS. 51 LAKHS WAS RAISED BY HIM FO R PROFESSIONAL SERVICES. AFTER ADDING SERVICES-TAX RS. 62,92,160 W AS PAYABLE TO HIM. IN SUCH CIRCUMSTANCES, INSITING HIM TO PAY AMO UNTS IN RESPECT OF BOOKING OF FLATS WOULD HAVE BEEN UNJUSTIFIABLE. THE NOTINGS DO NOT STATE THAT ANY AMOUNT WAS RECEIVED, BUT DIRECTS THE STAFF TO CREDIT AMOUNT. HAD LD. AO ANY DOUBT IN RESPECT OF T HE NOTING, LD AO SHOULD HAVE MADE ENQUIRY AS TO WHO MADE THIS NOT ING AND WHAT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 205 DID THE NOTING INTERPRETED. WE THEREFORE ARE IN AGR EEMENT WITH THE FINDINGS OF LD CIT(A) THAT THE ADDITION IS UNCALLED FOR IN THE PRESENT CASE. IN THE RESULT THE GROUND NO. 13 OF THE DEPART MENTS APPEAL FOR A.Y. 2013-14 (RS. 10,00,000) AND GROUND NO. 8 O F THE DEPARTMENTS APPEAL FOR A.Y. 2014-15 ARE REJECTED. 185. NOW WE TAKE UP GROUND NO. 1 OF THE DEPARTMENT S APPEAL FOR A.Y. 2014-15 RELATING TO CASH FOUND OF RS. 14,77,10 0 AT THE PREMISES OF ASSESSEE COMPANY. 186. THE FACTS RELATING TO THE PRESENT ADDITION ARE THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION AT THE PREMI SES OF ASSESSEE- COMPANY, INTER-ALIA, CASH OF RS. 14,77,100 WAS FOUN D AND SEIZED. LD. AO TREATED THE SAID CASH AS UNACCOUNTED AND MAD E ADDITION IN THE HANDS OF THE ASSESSEE. 187. AGAINST THIS ADDITION, ASSESSEE PREFERRED AN A PPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION AT PAGE 52 OF HIS ORDER, HOLDING AS UNDER:- 4.2.2 I HAVE CONSIDERED THE FACTS OF THE CASE, MATERIAL E VIDENCE ON RECORD AND FINDINGS OF THE AO. DURING THE COURSE OF SEARCH CASH AMOUNTING TO RS. 14,77,100/- WAS FOUND IN POSSESSION OF APPELLANT AN D RS. 9,00,000/- FROM IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 206 POSSESSION OF SHRI HEMANT SONI AS CLAIMED BY THE AP PELLANT. INITIALLY, AT THE TIME OF SEARCH SHRI HEMANT SONI WAS UNABLE TO EXPLA IN THE SOURCE OF CASH AND ALSO FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM. HOWEVER, AT THE LATER STAGE THE APPELLANT HAS FILED DETAILED EXPLANATION REGARDING THE SOURCE AND ACQUISITION OF THE IMPUNGE D CASH. APPELLANT IN SUPPORT HAS FILED COPIES OF CASH BOOK FROM 01.01.20 14 TO 30.01.2014 BEFORE THE AO AND DURING THE APPELLATE PROCEEDINGS APPELLA NT HAS FILED DETAILS OF OPENING AND CLOSING CASH BALANCE. ON PERUSAL OF CHA RT SHOWING CASH BALANCE IT WAS OBSERVED THAT CASH BALANCE AS ON 01. 01.2014 WAS RS. 73,93,343/- AND CLOSING CASH BALANCE AS ON 31.01.20 14 WAS RS. 75,01,959/0. THUS, THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVING THAT THE CASH FOUND DURING THE SEARCH WAS PART OF CASH B ALANCE AS PER BOOKS OF ACCOUNTS. NOW, THE ONUS LIES ON AO TO CONTRADICT TH E SAY OF APPELLANT AND PRODUCE SOME OR THE OTHER DOCUMENTARY EVIDENCE SUGG ESTING THAT THE CASH FOUND DURING THE SEARCH IS NOT RECORDED IN BOOKS OF ACCOUNT, WHICH THE AO FAILED TO DO. THUS, THE AO HAS NO LOCUS OF MAKING A DDITION ON ACCOUNT OF CASH FOUND DURING THE COURSE OF SEARCH BEING FULLY DISCLOSED/RECORDED IN BOOKS OF ACCOUNTS. IT IS ALSO VERY IMPORTANT TO MEN TION HERE THAT APPELLANT NEITHER POINTED OUT ANY SPECIFIC DEFECT IN BOOKS OF ACCOUNT OF THE APPELLANT NOR HAS REJECTED BOOKS OF ACCOUNT OF THE APPELLANT. THUS, THE ADDITION MADE BY THE AO AMOUNTING TO RS. 14,77,100/- IS DELETED. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. 188. AGAINST THIS, THE DEPARTMENT IS IN APPEAL BEFO RE US. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT DURING THE C OURSE OF SEARCH CASH OF RS. 14,77,100 WAS FOUND FROM THE ASSESSEE C OMPANY. FURTHER, CASH OF RS. 9,00,000 WAS FOUND FROM SHRI H EMANT SONI, IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 207 CMD OF THE ASSESSEE-COMPANY. ON BEING CONFRONTED, S HRI HEMANT SONI WAS UNABLE TO EXPLAIN THE SAME. THEREFORE, THE ADDITION OF RS. 14,77,100 WAS MADE BY LD. AO. LD. COUNSEL FOR THE R EVENUE THEREFORE RELIED ON THE FINDINGS OF THE LD. AO. 189. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SEARCH TOOK PLACE BETWEEN 29.01.2014 TO 02.02.2014. AS ON 31.01.2014, THE CASH IN HAND AS PER CASH BOOK WAS R S. 75,01,959 AND WAS VERY SUFFICIENT TO EXPLAIN THE CASH FOUND. FURTHER, HE CONTENDED THAT ON 01.01.2014 ALSO CASH IN HAND WAS RS. 73,93,343. HE FURTHER REFERRED TO A CHART SHOWING C ASH IN HAND REPORTED ON 31ST MARCH OVER DIFFERENT YEARS, AS UND ER: A.Y. BALANCE AS ON CASH BALANCE AS PER AUDITED ACCOUNTS PB 2008 - 09 31.03.2008 45,62,297 PB 37 2009 - 10 31.03.2009 8,93,257 PB 64 2010 - 11 31.03.2010 11,59,956 PB 90 2011 - 12 31.03.2011 16,70,448 PB 165 2012 - 13 31.03.2012 5,10,000 PB 190 2013 - 14 31.03.2013 42,96,000 PB 233 2014 - 15 31.03.2014 17,83,000 PB 278 IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 208 HE THEREFORE SUBMITTED THAT ASSESSEE COMPANY USED T O MAINTAIN A SUFFICIENT CASH BALANCE. THE CASH IN HAND ON THE DA TE OF SEARCH WAS THEREFORE ACCEPTABLE. 190. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND T HE ORDERS OF THE LD. LOWER AUTHORITIES. ON A CAREFUL CONSIDERATI ON OF THE FACTS, WE FIND THAT THE CASH IN HAND, AS ON THE DATE OF SE ARCH IS DULY EXPLAINED. AS PER THE CASH CHART SUBMITTED BY THE A SSESSEE FOR TRANSACTIONS BETWEEN 01.01.2014 TO 31.01.2014, THE CASH IN HAND ON 31.01.2014 COMES TO RS. 75,01,959. THE CASH RECE IPTS AND PAYMENTS BETWEEN 01.01.2014 TO 31.01.2014 HAVE NOT BEEN DOUBTED BY THE DEPARTMENT. THEREFORE CASH FOUND CAN BE DULY EXPLAINED FROM THE CASH BALANCE EXISTING WITH THE A SSESSEE. FURTHER, ASSESSEE HAS SUBMITTED A CHART SHOWING MON TH-WISE CASH BALANCE, AND ALSO THE CASH BALANCE IN THE REPORTED BALANCE SHEETS OVER DIFFERENT YEAR. THIS SHOWS THAT ASSESSEE WAS M AINTAINING SUFFICIENT CASH BALANCE ROUND THE YEARS, AND THERE WAS NO ABNORMALITY IN THE CASH BALANCE TAKEN ON 31.01.2014 . WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A) . WE THEREFORE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 209 DISMISS THE GROUND NO. 1 OF THE DEPARTMENTS APPEAL FOR A.Y. 2014- 15. 191. GROUND NO. 5 OF THE DEPARTMENTS APPEAL FOR A. Y. 2014-15 AMOUNTING TO RS. 10,00,000 RELATE TO ADDITION IN RE SPECT OF UNACCOUNTED RECEIPTS COVERED IN LPS A-2 PAGE NO. 25 . 192. THE FACTS RELATING TO THIS GROUND OF APPEAL AR E THAT DURING THE COURSE OF SEARCH A LOOSE COMPUTER GENERATED DOCUMEN T LPS A-2 PAGE NO. 25 WAS FOUND. AS PER THIS DOCUMENT, AGAINS T THE SALE OF FLAT TO SHRI ANANDJEET SINGH, ALLEGEDLY AN AMOUNT O F RS. 10,00,000 WAS RECEIVED IN CASH ON 04.10.2011. LD. AO THEREFOR E TREATED THIS RS. 10,00,000 AS UNACCOUNTED RECEIPTS OF THE ASSESS EE. 193. AGAINST THIS ADDITION, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DELETED THAT ADDITION AT PAGE NO. 97 TO 106 OF HIS ORDER, HOLDING AS UNDER (RELEVANT EXTRACT):- 4.5.5 THIS IS AN UNDISPUTED FACT THAT NEITHER ANY INCRIMI NATING MATERIAL WAS FOUND OR SEIZED DURING SEARCH PROCEEDINGS NOR T HE PAYER HAS EVER ADMITTED ABOUT PAYMENT OF RS. 10,00,000/- ON THE CO NTRARY THE ADVANCE RECEIVED BY THE APPELLANT WAS EITHER DUE TO CANCELL ATION OR THE SAME IS DULY REFLECTED IN BOOKS OF ACCOUNT. IN ABSENCE OF ANY CO RROBORATIVE EVIDENCE TO IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 210 PROVE THAT THERE WAS ANY EXCHANGE OF MONEY BY CASH, AO HAS NO LOCUS TO ASSUME THAT APPELLANT HAS RECEIVED RS. 10,00,000/-. IT IS SETTLED LAW THAT AO CANNOT MAKE ANY ADDITION MERELY ON BASIS OF SUSPICION, HOWEVER STRONG IT MAY BE. THE AO IS NOT JUSTIFIED IN PRESUMING CERTAIN FACTS WITHOUT HAVING ANYTHING TO CORROBORAT IVE. HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V/S CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT C ANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HE LD IN THE CASE OF UMACHARAN SAHA & BROS CO. V/S CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V/S CIT (954) 26 ITR 736 (SC). 4.5.6 IN VIEW OF THE ABOVE DISCUSSION, MATERIAL EVIDENCES ON RECORD AND CASE LAWS CITED, FIRSTLY, THE AO OUGHT TO HAVE DONE INDEPENDENT ENQUIRIES FROM WHOSE AS ALLEGED THE APPELLANT HAS RECEIVED SU CH AMOUNTS. SECONDLY, THE AO SHOULD HAVE DONE INDEPENDEN ENQURY TRANSACTI ON. THIRDLY, THE LOOSE PAPER OR RATHER SAY IT AS DUMB DOCUMENTS SHOULD BE A SPEAKING ONE HAVING DIRECT NEXUS WITH THE ASSESSEE, WHICH WAS NOT IN TH E CASE OF APPELLANT. THIRDLY, THE AO DID NOT REJECT BOOKS OF ACCOUNT OF THE APPELLANT. FOURTHLY, NEITHER THE CUSTOMER NOR ANY OF THE PARTNER OF APPE LLANT HAS EVER STATED THAT SUCH TRANSACTION ACTUALLY OCCURRED. LAST BUT NOT TH E LEAST, THE IMPUNGED LOOSE PAPERS WERE NOT FOUND IN POSSESSION OF THE AP PELLANT. MY FINDINGS ON THE ISSUE UNDER CONSIDERATION ARE BASED ON THE VARI OUS CONCLUSIONS DRAWN BY ME WHICH HAVE BEEN DISCUSSED IN THE ABOVE PARAS. THEREFORE, THE AO WAS NOT JUSTIFIES IN MAKING ADDITION OF RS. 10,00,000/- BEING ON SHEER ASSUMPTION AND PRESUMPTION BASIS. THUS, THE ADDITIO N MADE BY THE AO AMOUNTING TO RS. 10,00,000/- IS DELETED. THEREFORE APPEAL ON THIS GROUND IS ALLOWED. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 211 194. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. LD. COUNSEL FOR THE REVENUE RELIED ON THE ORDER OF LD. AO AND C ONTENDED THAT THE ADDITION MADE BY THE LD. AO MAY KINDLY BE RESTORED. 195. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AT THE FIRST INSTANCE, GOING BY THE RECEIPT ITSELF, IT IS CLEARLY ESTABLISHED THAT THE AMOUNT WAS ALLEGEDLY RECEIVED ON 04.10.2011 WHICH RELATED TO A.Y. 2012-13, AND THEREFORE ADDITI ON BY THE LD AO IN A.Y. 2014-15 WAS TOTALLY UNJUSTIFIED. FURTHER, H E CONTENDED THAT THE BOOKING OF SHRI ANANDJEET SINGH WAS CANCELLED S UBSEQUENTLY AND THE AMOUNT RECEIVED FROM HIM WAS REFUNDED. HE R EFERRED TO PB 1852-1853 SHOWING THAT THE BOOKINGS WAS CANCELLED A ND THE PAYMENT WAS MADE. THUS IN ANY CASE, SINCE THE BOOKI NG HAD BEEN CANCELLED AND THE AMOUNT REFUNDED, NO INCOME IN FAC T AROSE TO THE ASSESSEE. HE THEREFORE RELIED ON THE ORDER OF LD CI T(A). 196. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND O RDER OF THE LD. LOWER AUTHORITIES. WE FIND THAT THE ASSESSEE IS COR RECT IN CONTENDING THAT THE AMOUNT RECEIVED, IF ANY, FROM S HRI ANANDJEET SINGH, WAS REFUNDED AS THE BOOKING WAS CANCELLED. M OREOVER, SINCE THE AMOUNT WAS RECEIVED IN F.Y. 2011-12, ADDITION I N THE A.Y. 2014- IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 212 15 WAS UNJUSTIFIED. WE THEREFORE CONFIRM THE FINDIN G OF THE LD. CIT(A) ON THIS ISSUE.IN THE RESULT, THIS GROUND OF THE REVENUE IS DISMISSED. 197. NOW WE TAKE UP GROUND NO. 7 OF THE DEPARTMENT S APPEAL FOR A.Y. 2014-15 AMOUNTING TO RS. 5,00,000 IN RESPECT O F LPS A-13 RELATING TO ON-MONEY IN RESPECT OF 21 REGISTRIES FO UND FROM THE OFFICE ASSESSEE-COMPANY AND 6 REGISTRIES FOUND FROM THE SI TE OFFICE OF AAKRITI AQUA CITY. LD. AO RELIED ON THE STATEMENTS OF THE PARTIES AND CONTENDED THAT ON-MONEY WAS PAID BY THE ASSESSE E ON THE PURCHASE OF LAND. HE THEREFORE ADDED RS. 5,00,000 I N THE HANDS OF THE ASSESSEE AS ON-MONEY PAID. 198. AGAINST THIS ADDITION, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). LD. CIT(A) DELETED THE ADDITION AT PAGE NO. 144 TO 146 OF HIS ORDER, HOLDING AS UNDER (RELEVANT EXTRACT):- 4.7.8 IN VIEW OF THE ABOVE, FIRSTLY, THE AO OUGHT TO HAVE GIVEN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT. SECONDLY, TH E AO SHOULD HAVE BROUGHT EVIDENCE HAVING DIRECT NEXUS WITH THE ALLEGED ON MO NEY PAYMENT OF RS. 5,00,000/- (CORRECTLY RS. 36,00,000/-). THIRDLY, TH E ADDITION MADE BY THE AO ARE ON ASSUMPTION AND PRESUMPTION BASIS. FUTHER, TH E LOOSE PAPERS WERE FOUND IN POSSESSION OF SHRI YASHOVRDHAN JAIN AND NO T FROM APPELLANT. FIFTHLY, STATEMENTS WERE RECORDED BY THE THEN ADIT WHO WAS NOT IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 213 APPROPRIATE JURISDICTIONAL OFFICER. SIXTHLY, ALL TH E SELLERS EXCEPT SMT BINDA BAI FILED AFFIDAVITS STATING THAT ALL THE PAYMENTS MADE FOR PURCHASE OF LAND ARE DULY RECORDED IN BOOKS OF ACCOUNT. MOST IMPORTA NTLY, SHRI CHAND SINGH VIDE THEIR AFFIDAVITS WHICH ARE ON RECORD HAS STATE D THAT THE STATEMENT GIVEN BEFORE THE INCOME TAX AUTHORITIES WAS GIVEN UNDER P RESSUR. MY FINDINGS ARE BASED ON THE FINDINGS GIVEN IN ABOVE MENTIONED PARA S. THUS, KEEPING IN VIEW THE ABOVE DISCUSSION AND JUDICIOUSLY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELLARAM (SUPRA), THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. RS. 5,0 0,000/- ( (CORRECTLY RS. 36,00,000/-). THUS, ADDITION MADE BY THE AO AMOUNTI NG TO RS. 5,00,000/- IS DELETED BEING ON THE BASIS OF STATEMENT RECORDED BEHIND THE BACK OF APPELLANT AND NO MEANINGFUL OPPORTUNITY OF CROSS EX AMINATION WAS PROVIDED. THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. 199. AGAINST THIS, THE DEPARTMENT IS IN APPEAL. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT THE LD. AO WAS JUSTIFIED IN MAKING THE ADDITION FOR ON-MONEY. 200. ON THE CONTRARY, AT THE OUSET, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FINDING OF LD.CIT(A) 201. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, ORDE RS OF THE LD. LOWER AUTHORITIES AND THE EVIDENCES ON RECORD. WE F IND THAT THE VERY BASIS OF THE ADDITION IS SOME STATEMENTS RECOR DED OF THE SELLERS. HOWEVER, INSIPTE OF BEING ASKED FOR, LD. AO DID NOT PROVIDE AN OPPORTUNITY TO CROSS-EXAMINE THE SELLERS. THUS, THE STATEMENTS OF IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 214 THE SELLERS CANNOT BE RELIED ON. FURTHER, THE STATE MENTS ARE NOT CORROBORATED BY BRINGING ANY MATERIAL ON RECORD. A MERE STATEMENT OF THIRD PERSON CANNOT BIND THE ASSESSEE, UNLESS IT IS CORROBORATED BY ANY EVIDENCE ON RECORD. FURTHER, LD. AO RELIED O N THE BANK STATEMENTS OF THE SELLERS. HOWEVER, BANK STATEMENT OF NOT EVEN A SINGLE SELLER WAS EVER BROUGHT ON RECORD TO ESTABLI SH THAT CASH WAS DEPOSITED IN THEIR BANK ACCOUNTS. EVEN IN THE PAPER BOOK FILED BY THE DEPARTMENT, SAME HAS NOT BEEN FILED. THUS, NO R ELIANCE CAN BE PLACED ON SAME. IN RESPECT OF SHRI RAM SINGH, SHRI CHANDAR SINGH AND OTHERS, SHRI CHANDAR SINGH LATER DENIED TO HAVE RECEIVED ON- MONEY IN AFFIDAVIT. IN RESPECT OF SHRI PRAHALAD SIN GH, SHRI MANOHAR SINGH AND SHRI HUKUM SINGH, WE FIND THAT OUT OF THE THREE SELLERS, TWO DENIED TO HAVE RECEIVED ON-MONEY. THE THIRD SEL LER, SHRI HUKUM SINGH ALTHOUGH STATED THAT ON-MONEY WAS RECEIVED AN D THAT SAME WAS DEPOSITED IN HIS BANK; BUT NO SUCH BANK STATEME NT WAS EVER PRODUCED. THE RECEIPT OF ON-MONEY WAS NOT CORROBORA TED BY ANY EVIDENCE. THUS, CONSIDERING ALL THE FACTS AND CIRCU MSTANCES OF THE CASES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). IN THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 215 RESULT, GROUND NO. 7 OF THE DEPARTMENTS APPEAL FOR A.Y. 2014-15 IS DISMISSED. 202. NOW WE TAKE UP THE APPEALS FILED AT THE INSTAN CE OF THE ASSESSEE . 203. GROUND NO. 1 OF THE ASSESSEES APPEAL FOR A.Y. 2013-14 AND A.Y. 2014-15 RELATE TO THE VALIDITY OF ASSESSMENT. SINCE NO SPECIFIC SUBMISSIONS WERE MADE BY THE LEARNED COUNSEL OF THE ASSESSEE ON THIS ISSUE IT SEEMS THAT ASSESSEE IS NOT INTERESTED TO PRESS THIS GROUND AND FURTHER NOTHING WAS BROUGHT ON RECORD TO SHOW THAT THE ASSESSMENT SO FRAMED ARE INVALID. THESE GROUNDS OF THE ASSESSEE ARE THEREFORE DISMISSED. 204. NOW WE TAKE THE COMMON GROUNDS, GROUND NO. 2 T O 5 OF THE ASSESSEES APPEAL FOR A.Y. 2013-14 (RS. 4,34,08,100 ) AND GROUND NO. 2 AND 3 OF THE ASSESSEES APPEAL FOR A.Y. 2014- 15 (RS. 28,00,00,000) RELATING TO ADDITION ON ACCOUNT OF RE TRACTION OF THE SURRENDER MADE DURING THE COURSE OF SEARCH U/S. 132 . 205. THE FACTS RELATING TO THIS GROUND OF APPEAL AR E THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS AT THE PREM ISES OF THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 216 ASSESSEE-COMPANY BETWEEN 29 TH JAN. 2014 TO 1 ST FEB. 2014, STATEMENT ON OATH U/S. 132(4) OF THE ACT WAS RECORD ED OF THE CHAIRMAN AND MANGING DIRECTOR OF THE ASSESSEE COMPA NY MR.HEMANT SONI ON MULTIPLE OCCASIONS. ON 1 ST FEB. 2014, HE ACCEPTED SURRENDER OF INCOME OF RS. 50 CRORES IN TH E GROUP. FURTHER, ON 4 TH FEB. 2014, HE GAVE THE BREAK-UP OF THIS 50 CRORES; AND IN THE ASSESSEE COMPANY HE ACCEPTED A SURRENDER OF RS. 30 CRORES; RS. 2 CRORES IN THE A.Y. 2013-14 AND RS. 28 CRORES IN THE A.Y. 2014-15. LATER ON, CERTAIN CORROSPONDANCES TOO K PLACE BETWEEN THE DEPARTMENT AND THE ASSESSEE-COMPANY. THEREAFTER ON 30.05.2014, STATEMENT OF SHRI HEMANT SONI WAS AGAIN RECORDED, WHEREBY HE WAS ASKED ABOUT THE SURRENDER MADE DURIN G THE SEARCH. HE REPLIED THAT VOLUMINOUS DOCUMENTS WERE S EIZED FROM THE PREMISES, AND THEREFORE IT IS TAKING TIME FOR ANALY SING THE SAME. ONCE THE DOCUMENTS SEIZED ARE VERIFIED FROM THE BOO KS, HE WILL PROVIDE THE BREAKUP OF SAME. SUBSEQUENTLY, ON 12.11 .2014, RETURN WAS FILED FOR A.Y. 2013-14 AND A.Y. 2014-15. IN THI S RETURN, THE INCOME SURRENDERED EARLIER WAS NOT OFFERED. LATER, ON DURING ASSESSMENT, A RETRACTION LETTER WAS ALSO FILED ON 0 6.02.2016. LD. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 217 AO, HOWEVER, DISREGARDED THE RETRACTION, AND TREATE D RS. 2 CRORES AS INCOME FOR A.Y. 2013-14 AND TREATED RS. 28 CRORES A S INCOME FOR A.Y. 2014-15. IN THE RETURN OF INCOME FOR A.Y. 201 3-14, ASSESSEE HAD OFFERED INCOME OF RS. 11,04,36,150/- IN THE RET URN AND THE LD. AO AFTER MAKING ADDITION ON VARIOUS GROUNDS, ASSESS ED THE TOTAL INCOME AT RS. 35,52,18,458/-. HE THEREFORE CONCLUDE D THAT SINCE THE TOTAL ADDITION MADE DURING ASSESSMENT FOR A.Y. 2013-14 EXCEEDED RS. 2,00,00,000/- NO SEPARATE ADDITION NEE DS TO BE MADE. HE THEREFORE DID NOT MAKE SEPARATE ADDITION IN A.Y. 2013-14. SIMILARLY, IN A.Y. 2014-15, AGAINST THE TOTAL INCOM E OFFERED BY THE ASSESSEE AT RS. 8,48,71,480/-, LD. AO ASSESSED THE TOTAL INCOME AT RS. 34,80,77,254/- AFTER MAKING VARIOUS ADDITIONS O N DIFFERENCE GROUNDS. HE HELD THAT THE TOTAL OF ADDITIONS MADE W AS RS. 27,16,02,887/- AND THEREFORE HE ADDED RS. 83,97,113 /- SEPARATELY ON ACCOUNT SURRENDER; THUS MAKING THE TOTAL ADDITIO N TO RS. 28,00,00,000/-. THUS, ALTHOUGH THE LD. AO DID NOT A CCEPT THE RETRACTION, THE ADDITION MADE BY HIM TOWARDS INCOME SURRENDERED DURING THE COURSE OF SEARCH IN A.Y. 2013-14 WAS NIL , AND IN A.Y. 2014-15 WAS RS. 83,97,113/-. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 218 206. AGAINST THE ADDITION BY THE LD. AO, ASSESSEE P REFERRED AN APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) DISCUSSED THE VARIOUS GROUNDS OF APPEAL AND DELETED MANY ADDITIONS. HOWEV ER, IN RESPECT OF RETRACTION OF STATEMENT, HE DID NOT ACCEPT THE R ETRACTION OF SURRENDER. AS HE HAD DELETED OTHER ADDITIONS, THERE FORE, HE ISSUED ENHANCEMENT NOTICE AND ENHANCED THE INCOME ON ACCOU NT OF RETRACTION FROM RS. 83,97,113/- TO RS. 28 CRORES IN A.Y. 2014-15. IN THE A.Y. 2013-14, HE HAD ENHANCED THE ADDITION IN R ESPECT OF ON- MONEY RECEIVED ON THE SALE OF HIGHLAND PROJECT. LD. AO MADE ADDITION OF RS. 2,05,66,065/- ON ACCOUNT OF ON-MONE Y RECEIVED IN THE HIGHLAND PROJECT. LD. CIT(A) ENHANCED THE ON-MO NEY RECEIVED IN THE HIGHLAND PROJECT FROM RS. 2,05,66,065/- TO RS. 4,34,08,100/-. HE RELIED ON THE STATEMENT RECORDED DURING THE COUR SE OF SEARCH THAT ON-MONEY RECEIVED ON SALE OF PLOTS AT HIGHLAND PROJECT WAS 5- 10%. SINCE HE ENHANCED THE ADDITION TO RS. 4,34,08, 100/- I.E. MORE THAN RS. 2 CRORES SURRENDERED DURING SEARCH, HE STA TED THAT MAKING ADDITION OF RS. 2 CRORES AGAIN WOULD AMOUNT TO DOUB LE ADDITION AND THEREFORE DID NOT MAKE SEPARATE ADDITION FOR SURREN DER. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 219 207. AGAINST THIS ADDITION/ ENHANCEMENT, THE ASSESS EE IS IN APPEAL BEFORE US. IN THE A.Y. 2013-14, BY VARIOUS GROUNDS OF APPEAL, ASSESSEE IS CHALLENGING THE ADDITION ON ACCOUNT OF ON-MONEY RECEIVED ON SALE OF PLOTS OF HIGHLAND PROJECT AND F URTHER, THE ENHANCEMENT OF RS. 2.00 CRORES AND ADJUSTING THE SA ME AGAINST THE INCREASE IN EXCESS PROFITS ON THE SALE OF PLOTS AT HIGHLAND PROJECT. IN THE A.Y. 2014-15, BY VARIOUS GROUNDS, THE ASSESSEE IS CHALLENGING THE ENHANCEMENT OF INCOME AND SUSTAINING THE ADDITI ON OF RS. 28 CRORES ON ACCOUNT OF SURRENDER DURING SEARCH. SINCE BOTH THESE ISSUES ARE INTERCONNECTED, SAME ARE TAKEN UP TOGETH ER AND ADJUDICATED TOGETHER. 208. DURING THE COURSE OF HEARING, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SEARCH AND SEIZURE OPERATION STA RTED ON 29 TH JAN. 2014 AND CONTINUED UPTO 4 DAYS. SEARCH ACTION TOOK PLACE DURING THESE 4 DAYS, DAY-AND-NIGHT AND AT VARIOUS P REMISES OF THE ASSESSEE CONCERN. DURING THE SEARCH OPERATIONS STAT EMENT ON OATH WERE RECORDED ON SHRI HEMANT SONI ON MULTIPLE OCCAS IONS. ON 30.01.2014, HIS STATEMENT WAS RECORDED ASKING 33 QU ESTIONS. HE REPLIED TO THEM AND TRIED TO EXPLAIN EACH AND EVERY QUESTION ASKED IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 220 FOR. SIMILARLY ON 31.01.2014 STATEMENT WAS RECORDED ON TWO OCCASIONS. LD. COUNSEL TRIED TO TAKE US THROUGH THE STATEMENTS RECORDED ON THESE DATES PALCED AT PB 1197-1216 AND SUBMITTED THAT DURING HIS STATEMENT, SHRI SONI TRIED TO EXPLA IN THE TRANSACTIONS TO THE BEST OF HIS KNOWLEDGE. THEREAFT ER, AFTER 3 SLEEPLESS NIGHTS, ON THE FOURTH DAY, WHEN THE STATE MENT WAS RECORDED ON 01.02.2014, AND AGAIN MORE THAN 30 QUES TION WERE ASKED, SHRI HEMANT SONI IN AN ILL STATE OF MIND, MA DE THE SURRENDER OF RS. 50 CRORES IN THE GROUP. HE SUBMITTED THAT IT CAN BE SEEN FROM HIS STATEMENT THAT NO SPECIFIC INCRIMINATING DOCUME NT WAS POINTED OUT OR FOUND WHICH COULD SHOW UNACCOUNTED INCOME. L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SHRI SONI WAS TOTAL LY TIRED, AND IN ILL STATE OF MIND WHILE MAKING SURRENDER. LD. COUNSEL F URTHER TOOK US TO THE ASSESSMENT ORDER, AND SUBMITTED THAT THE LD. AO DID NOT POINT OUT ANY INCRIMINATING MATERIAL FOUND DURING T HE COURSE OF SEARCH WHICH WAS MADE THE BASIS OF SURRENDER. LD. C OUNSEL SUBMITTED THAT DURING ASSESSMENT, WHATEVER ADDITION WERE MADE ON ACCOUNT OF INCRIMINATING MATERIAL, HAD BEEN SEPARAT ELY CONTESTED BEFORE THE LD. CIT(A) AND BEFORE THIS HONBLE BENCH . THERE EXISTS NO IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 221 BASIS FOR MAKING A SEPARATE ADDITION ON ACCOUNT OF MERE SURRENDER OF INCOME. LD. COUNSEL FOR THE ASSESSEE SPECIFICALL Y TOOK US TO PAGE 20 OF THE ASSESSMENT ORDER, AND SUBMITTED THAT THE LD. AO HIMSELF STATED THAT IT IS NOT POSSIBLE FOR THE AUTHORISED O FFICER U/S. 132 TO PUT EVERY MINUTE DETAIL OF THE DISCREPANCIES AND DO CUMENTS IN THE STATEMENT RECORDED DURING THE SEARCH PROCEEDINGS. H E FURTHER, REFERRED THE FINDINGS OF LD. CIT(A) AND CONTENDED T HAT IN RESPECT OF SURRENDER OF INCOME, LD. CIT(A) COULD NOT ALSO POIN T ANY SPECIFIC INCRIMINATING MATERIAL HE SUBMITTED THAT THE LD. CI T(A) INFACT HIMSELF DELETED MANY ADDITIONS MADE PURPORTEDLY MAD E BY THE LD. AO ON THE BASIS OF INCRIMINATING MATERIAL. 209. DURING THE COURSE OF HEARING, LD. COUNSEL FOR THE ASSESSEE RELIED ON A PLETHORA OF JUDGMENTS. THE SAME ARE CIT ED BELOW: 1. PULLANGODE RUBBER PRODUCE CO. LTD. 91 ITR 18 (SC) HELD THAT (A) AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. B). RETRACTION FROM ADMISSION WAS PERMISSIBLE IN LAW AND IT WAS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT. IN PRESENT CASE ALSO THE ADDITION WAS ON BASIS OF VOLUNTARY DISCLOSURE U/S 132(4), WHICH WAS LATER ON RETRACTED BY THE ASSESSEE. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 222 2. CIT VS. CHANDRAKUMAR JETHMAL KOCHAR [2015] TAXMANN.COM 292 (GUJARAT) MERELY ON BASIS OF ADMISSION THAT FEW BENAMI CONCERNS WERE BEING RUN BY ASSESSEE, ASSESSEE COULD NOT BE SUBJECTED TO ADDITION WHEN ASSESSEE RETRACTED FROM SUCH ADMISSION AND REVENUE COULD NOT FURNISH ANY CORROBORATIVE EVIDENCE IN SUPPORT OF SUCH ADMISSION IN PRESENT CASE ALSO, THE ADDITION WAS BASED ON ADMISSION WHICH WAS LATER ON RETRACTED. DEPT COULD NOT FURNISH ANY INCRIMINATING DOCUMENT OR OTHERWISE TO SUPPORT THE ADMISSION. HENCE, ADDITION IS UNJUSTIFIED. 3. CIT VS. RAMANBHAI B PATEL (GUJARAT HIGH COURT) HELD THAT ADMISSION OF UNDISCLOSED INCOME BY ASSESSEE IS NOT CONCLUSIVE IF NO EVIDENCE IS FOUND TO SUPPORT THE ADMISSION. A RETRACTION, THOUGH BELATED, IS VALID. IN THE PRESENT CASE ALSO, THE ADDITION WAS NOT BASED ON ANY INCRIMINATING DOCUMENT AND THE RETRACTION FILED ON 30.11.11 IS VALID. 4. CIT VS. SUNIL AGGARWAL (2015) 64 TAXMANN.COM 107(DELHI)/ (2016) 237 TAXMANN 512 (DELH)/ (2015) 379 ITR 367(DELHI) HELD THAT A RETRACTED STATEMENT U/S 132(4) WOULD REQUIRE SOME CORROBORATIVE MATERIAL FOR THE LD AO TO MAKE ADDITION ON BASIS OF SUCH STATEMENT. IN PRESENT CASE, THE RETRACTION WAS BEFORE THE ASSESSMENT, AND THE ADDITION WAS NOT CORROBORATED BY ANY EVIDENCE BUT WAS MERELY ON THE BASIS OF STATEMENT RECORDED DURING SEARCH. 5. CIT VS. O. ABDUL RAZAK 350 ITR 71 (KER) INITIAL BURDEN TO SHOW THAT CONFESSION WAS VOLUNTARY AND NOT OBTAINED BY RESORTING TO COERCIVE MEANS IS ON THE DEPARTMENT. RETRACTION ITSELF PROVES THAT THE CONFESSION WAS UNDER MENTAL PRESSURE AND HENCE LIABLE TO BE RETRACTED. 6. TDI MARKETING P LTD. 28 SOT 215 (DEL.) HELD THAT SINCE BASIS OF ADDITION WAS STATEMENT OF ASSESSEE RATHER THAN ACTUAL INVESTMENT HAVING BEEN MADE, PROVISIONS OF SEC 69 WERE NOT ATTRACTED TO SUCH A SITUATION. SAME FACTS AS THE ADDITION WAS BASED ON STATEMENT. 7. M. NARAYANAN & BROS. V. ACIT, SIC, SALEM[2011] 13 TAXMANN.COM 49 (MADRAS) IT WAS HELD THAT WHEN ASSESSEE HAD EXPLAINED HIS STATEMENT AS NOT CORRECT IN CONTEXT OF MATERIALS PRODUCED, SAME RETRACTION ITSELF PROVES THAT THE CONFESSION WAS UNDER MENTAL PRESSURE AND HENCE LIABLE TO BE RETRACTED. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 223 COULD NOT BE ADDED TO ASSESSEE'S INCOME. 8. CIT VS DHINGRA METAL WORKS 196 TAXMAN 488 (DEL.) HELD THAT WHEN ASSESSEE HAD BEEN ABLE TO EXPLAIN DISCREPANCY IN STOCK FOUND DURING COURSE OF SURVEY, THEN ADDITION SOLELY ON BASIS OF STATEMENT MADE BY PARTNER ON BEHALF OF ASSESSEE COULD NOT BE SUSTAINED. PRESENT CASE ALSO, THE ADDITION WAS SOLELY BASED ON ADMISSION AND HENCE NOT SUSTAINABLE. 9. DCIT V.NARENDRA GARG & ASHOK GARG [2016] 72 TAXMANN.COM 355 (GUJARAT) IT WAS HELD THAT WHERE ASSESSEE RETRACTED FROM DISCLOSURE MADE IN STATEMENT UNDER SECTION 132(4) WHICH WAS NOT ACCEPTED BY REVENUE, AND IF NO UNDISCLOSED INCOME WAS FOUND DURING SEARCH, REVENUE COULD NOT MAKE ADDITION ON BARE SUSPICION AND PRESUMPTION PRESENT CASE ALSO, THE ADDITION IS ON BARE SUSPICION AND PRESUMPTION, WHICH THE DEPARTMENT COULD NOT SUPPORT THROUGH CORROBORATIVE EVIDENCE. 10 . BASANT BAN SAL V ACIT (2015) 63 TAXMANN.COM 199 (JAIPUR TRIB.) HELD THAT NEITHER ANY WORTHWHILE INCRIMINATING MATERIAL, INFORMATION, AND EVIDENCE WAS DISCOVERED AS A RESULT OF IMPUGNED MULTIPLE SEARCH OPERATIONS NOR THE ADDITIONS SUSTAINED ARE BASED ON ANY SUCH MATERIAL. THE SOLE BASIS OF ADDITIONS IS THE DISCLOSURE WHICH WE HAVE HELD TO BE INVOLUNTARY. CONSEQUENTLY THE ADDITIONS DO NOT CONFORM TO THE MANDATE OF SEC. 153A. THE ADDITION IN OUR CASE WAS SOLELY ON THE BASIS OF STATEMENT OF SURRENDER BY BROTHER/ BROTHER-IN-LAW OF THE ASSESSEE AND NOT A SINGLE REFERENCE FOR ANY INCRIMINATING DOCUMENT IS MADE. 11 . CIT V. BALAJI WIRE (P) LTD. [2008] 304 ITR 393/[2007] 164 STATEMENT MADE BY ANY THIRD PARTY AFTER THE DATE OF SEARCH IS OF NO CONSEQUENCE; ASSESSEE IN OUR CASE, NO CHANCE OF CROSS EXAMINATION ON THE BASIS OF SURRENDER WAS GIVEN. THE SURRENDER WAS ON THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 224 TAXMAN 559 (DELHI), HAS A RIGHT OF ITS CROSS - EXAMINATION. THIS HAVING NOT BEEN DONE THE ADDITIONS CANNOT BE MADE BACK OF THE ASSESSEE. 12 . CIT V.HARJEEV AGGARWAL [2016] 70 TAXMANN.COM 95 (DELHI) A STATEMENT RECORDED U/S. 132(4) CAN FORM BASIS FOR A BLOCK ASSESSMENT ONLY IF SUCH STATEMENT RELATES TO ANY INCRIMINATING EVIDENCE OF UNDISCLOSED INCOME UNEARTHED DURING SEARCH. SAME AS ABOVE 13 . VINOD SOLANKI V. UOI [2009] ELT 157(SC). IT IS THE BURDEN OF THE DEPARTMENT THAT MATERIAL BROUGHT ON RECORD INCLUDING RETRACTED STATEMENT MUST BE SUBSTANTIALLY CORROBORATED BY OTHER INDEPENDENT AND COGENT EVIDENCES. IN OUR CASE, THE STATEMENT OF SHRI SUDEEP MAHESHWARI DISCLOSING ADDITIONAL INCOME WAS NOT SUPPORTED WITH ANY CORROBATIVE EVIDENCE, HENCE NO ADDITION CAN BE MADE ON THE BASIS OF ADMISSION IN THE STATEMENT U/S 132(4) 14 . KRISHAN V. KURUKSHETRA UNIVERSITY AIR 1976 SC 376. ADMISSION MADE IN IGNORANCE OF SUPPORTING RECORD AND LEGAL RIGHTS OR UNDER DURESS CANNOT BIND SUCH STATEMENT OR DISCLOSURE. IN OUR CASE, ABSENCE OF ANY SUPPORTING RECORD DOES NOT BIND THE ADMISSION MADE ON OUR BEHALF BY THIRD PARTY. 15 . CIT V. VIKAS ELECTRONICS (INTERNATIONAL) (P.) LTD. [2007] 166 TAXMAN 137 (DELHI) WHATEVER BE THE MERITS OR DEMERITS OF STATEMENTS OF 'ASSESSEE, UNLESS THEY COULD BE DIRECTLY CONNECTED WITH THE RECOVERY OF ANY INCRIMINATING MATERIAL DURING THE SEARCH, THEY COULD NOT BE USED AGAINST THE ASSESSEE. IN OUR CASE ALSO, SINCE TH E UNDISCLOSED INCOME COULD NOT BE CONNECTED TO ANY INCRIMINATING DOCUMENT, THEY CANNOT BE THE BASIS OF ADDITION. 16 . CIT VS. BHANWAR LAL MURWATIYA 39 TW 214 DEPARTMENT SHOULD BRING ON RECORD SUFFICIENT EVIDENCE BEFORE MAKING ADDITION U/S 69 OF THE INCOME TAX ACT, 1961 AND THE RETREATED STATEMENT CANNOT BE MADE THE SOLE BASIS FOR MAKING ADDITION SAME AS ABOVE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 225 AS IT CANNOT BE SAID TO BE CONCLUSION. 17 . KALISHABEN MANHARLAL CHOKSHI VS. CIT (2008) 220 CTR (GUJ) 138 : (2010) 328 ITR 411 : (2008) 174 TAXMAN 466 : (2008) 14 DTR 257 ADDITION ON THE BASIS OF RETRACTED STATEMENT U/S 132(4) - STATEMENT RETRACTED BY ASSESSEE AFTER TWO MONTHS ON THE GROUND THAT IT WAS RECORDED UNDER COERCION AND DURESS CANNOT BE BASIS OF ADDITION. IN OUR CASE, THE STATEMENT WAS DULY RETRACTED ON 30.11.11, AT THE EARLIEST OCCASION, AS ASSESSEE CAME TO KNOW ABOUT IT AND THUS CANNOT BE THE BASIS OF ADDITION 18 . SHREE GANESH TRADING CO. V. CIT [2013] TAXMANN.COM 170 (JHARKHAND) HELD THAT THE STATEMENT RECORDED U/S. 132(4) WITHOUT CORROBORATIVE EVIDENCE COULD NOT FASTEN LIABILITY IN OUR CASE ALSO, SINCE THE UNDISCLOSED INCOME COULD NOT BE CONNECTED TO ANY INCRIMINATING DOCUMENT, THEY CANNOT BE THE BASIS OF ADDITION. 19 . SMT. RANJNABEN MANSUKHLAL SHAH V. ACIT [2004] 2 881 (RAJKOT) HELD T HAT AO COULD NOT MAKE ADDITION ONLY ON BASIS OF DISCLOSURE STATEMENT WITHOUT CORROBORATION AND EVIDENCE IN SUPPORT OF DISCLOSURE STATEMENT. IN PRESENT CASE ALSO, THE ADDITION WAS MERELY BASED ON STATEMENT, HENCE ADDITION IS UNJUSTIFIED. 20 . ACIT V. JORAWA R SINGH M. RATHOD [2005] 148 TAXMAN 35(AHD.) (MAG.) HELD THAT THE SURRENDER WAS UNDER PRESSURE AS NO SUCH EVIDENCE OR ASSET/EVIDENCE WERE FOUND IN MOVABLE OR IMMOVABLE PROPERTY FROM THE SEARCH PREMISES, THUS ADDITION IS UNSUSTAINABLE. IN PRESENT CASE ALS O, THE ADDITION WAS BASED ON STATEMENT OF BROTHER/BROTHER IN LAW , AND NOTHING INCRIMINATING WAS FOUND FROM THE SEARCH PREMISES. 21 . NARESH KUMAR VERMA VS. ACIT, CENTRAL CIRCLE, PATIALA [2013] 32 TAXMANN.COM 280 (CHANDIGARH - TRIB.) HELD THAT ADDITION I N RESPECT OF JOB WORK CHARGES MERELY ON BASIS OF STATEMENT WAS NOT SUSTAINABLE AS NO EVIDENCE WAS FOUND IN POSSESSION OF ASSESSEE TO SUPPORT THE ADMISSION. PRESENT CASE ALSO, THERE WAS NO INCRIMINATING DOCUMENT HENCE ADDITION IS UNSUSTAINABLE. 22 . DCIT, CIRCLE 6(1), AHMEDABAD VS. PRAMUKH BUILDERS [2008] 112 ITD 179 (AHM.) (TM) HELD THAT WHEN THE ASSESSEE RETRACTED THE STATEMENT AND NO OTHER EVIDENCE WAS ON RECORD TO SHOW THE UNDISCLOSED PRESENT CASE ALSO , THE ADMISSION WAS RETRACTED AND NO EVIDENCE WAS ON RECORD. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 226 INCOME BARING STATEMENT, ADDITION IS UNSUSTAINABLE. 23 . ARUN KUMAR BHANSALI V. DCIT [2006] 10 SOT 46 (BANG.) (URO) HELD THAT THE LD AO SHOULD TAKE COGNIZANCE OF SUCH CORRECT INCOME AS DEPICTED IN BOOKS OF ACCOUNTS AS WELL AS SEIZED MATERIAL AND SHOULD NOT ADOPT FIGURES MERELY AS PER ADMISSION OF ASSESSEE. PRESENT CASE ALSO, THE ADDITION MERELY ON BASIS OF ADMISSION BY BROTHER IN LAW AND NO EVIDENCE IS UNSUSTAINABLE. 24 SHREE CHAND SONI V. DCIT [2006] 101 TTJ 1028 (JODH.) HELD THAT WHERE THE ADDITION WAS BASED ON STATEMENT ALONE AND NO SUCH INCOME WAS DISCLOSED IN RETURN FILED FOR THE BLOCK PERIOD BUT ADMITTED AND NO INCRIMINATING DOCUMENT WAS FOUND TO SUPPORT THE IMPUGNED ADDITION, THE ADDITION WAS TO BE DELETED. SIMILAR CASE, WHERE ADDITION WAS MERELY ON STATEMENT RECORDED U/S 132(4) AND THAT TOO, WITHOUT ANY INCRIMINATING DOCUMENT. THE ASSESSEE HAS FULLY AND TRULY DISCLOSED ALL THE FOREIGN AS WELL AS INDIAN INCOME IN THE RETURN FILED. 25 . RAJESH JAIN V. DCIT [2006] 100 TTJ 929 (DELHI) CONFESSION AL STATEMENT SHOULD BE CORROBORATED WITH SOME MATERIAL EVIDENCE TO SHOW THAT ASSESSMENT WAS JUST AND FAIR. SIMILARLY, THE CONFESSION WAS NOT CORROBORATED WITH ANY EVIDENCE, HENCE ADDITION IS UNJUSTIFIED. 26 . JYOTICHAND BHAICHAND SARAF & SONS P. LTD. V. DCIT [2013] 86 DTR (PUNE) 289 IT WAS HELD THAT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF STATEMENT RECORDED U/S 132(4) IN ABSENCE OF CORROBORATIVE EVIDENCE. SAME AS ABOVE 27 . CIT VS S. AJIT KUMAR 300 ITR 152 (MAD.) WHERE NO MATERIAL WAS FOUND DURING SEARCH IN RESPECT OF AMOUNT ALLEGEDLY PAID BY ASSESSEE TO A BUILDER, MATERIAL FOUND IN COURSE OF SURVEY IN PREMISES OF BUILDER COULD NOT BE USED IN BLOCK ASSESSMENT OF ASSESSEE TO MAKE ADDITION IN PRESENT CASE ALSO, THERE WAS NO INCRIMINATING MATERIAL OR DOCUMENT WAS FOUND FROM SEARCH PREMISES. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 227 28 . ABDUL QUYME V CIT (1990) 184 ITR 404 (ALL) AN ADMISSION OR AN ACQUIESCENCE CANNOT BE A FOUNDATION FOR AN ASSESSMENT. A FINDING IN THIS REGARD IS A CONDITION PRECEDENT AND WHERE NO SUCH FINDING IS RECORDED, THE ACTION OF THE AUTHORITY CONCERNED CANNOT BE UPHELD. SIMILARLY, IN PRESENT CASE THE ADMISSION CANNOT BE BINDING WITHOUT FINDINGS BY THE AUTHORITY. 29 . CIT VS RADHE ASSOCIATES (2013) 37 TAXMANN.COM 336 (GUJ.) HELD THAT THE ADDITION BY ASSESSEE CONSTRUCTION FIRM, ONLY ON BASIS OF PARTNER'S STATEMENT WHICH WAS LATER RETRACTED, WAS NOT SUSTAINABLE IN PRESENT CASE ALSO, THE STATEMENT WAS RETRACTED AND HENCE ADDITION IS UNSUSTIANBLE. 30 . CIT VS M.P. SCRAP TRADERS (2015) 60 TAXMANN.COM 205 (GUJ.) HELD THAT EXCEPT STATEMENT, THERE WAS NO OTHER MATERIAL OR CORROBORATIVE MATERIAL WITH ASSESSING OFFICER TO JUSTIFY SAID ADDITION HENCE ADDITION IS UNJUSTIFIED SAME AS ABOVE. 210. LD. COUNSEL FOR THE ASSESSEE FURTHER REFERRED TO CBDT CIRCULAR DATED 10.03.2003 AND CONTENDED THAT VIDE THIS CIRCU LAR, A CLEAR MANDATE WAS PUT ON THE OFFICERS OF THE DEPARTMENT T HAT INSTEAD OF RECORDING CONFESSIONAL STATEMENTS, EFFORTS SHALL BE MADE ON COLLECTING EVIDENCES. ANYTHING CONTRARY TO THIS DIR ECTION WOULD BE TAKEN ADVERSELY. THIS DIRECTION OF THE CBDT WAS REP EATED SUBSEQUENTLY AGAIN ON 18.12.2014. HE THEREFORE CONT ENDED THAT A MERE CONFESSION CANNOT BE A BASIS FOR ADDITION. IN SO FAR AS THE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 228 MATERIAL FOUND DURING THE COURSE OF SEARCH, SAME HA VE BEEN IMPUGNED UNDER VARIOUS GROUNDS OF APPEAL. THUS, THI S ADDITION, WHICH IS PURELY ON SURRENDER CANNOT BE MADE. 211. IN RESPECT OF ACCEPTANCE OF ON-MONEY IN RESPEC T OF SALE OF LAND HIGHLAND PROJECT, LD. COUNSEL FOR THE ASSESSEE CONT ENDED THAT THERE WAS NO EVIDENCE EXCEPT THE STATEMENT OF MR. HEMANT SONI. NO MATERIAL HAS BEEN BROUGHT ON RECORD. HE FURTHER SUB MITTED THAT DURING THE COURSE OF SEARCH, WHEN ASKED ABOUT ON-MO NEY RECEIPT IN ANY PROJECT, MR. HEMANT SONI STATED IN REPLY TO QUE STION 30 ON 01.02.2014 THAT ON THE SALE OF PLOTS IN THE HIGHLAN D PROJECT, WE HAVE RECEIVED ON-MONEY OF 5-10% ABOVE THE RECORDED SALE CONSIDERATION. THERE WAS NO EVIDENCE OR INQUIRY FRO M ANY CUSTOMER TO HOLD THAT SUCH ON-MONEY WAS RECEIVED. LD. COUNSE L FOR THE ASSESSEE THEREFORE SUBMITTED THAT NO SUCH ADDITION OF ON-MONEY RECEIPTS, WHICH WAS PURELY BASED ON MERE STATEMENT OF MR.HEMANT SONI WAS CALLED FOR. HE ALTERNATIVELY SUBMITTED THA T IN ANY CASE, IF THE ON-MONEY RECEIPTS ARE ASSESSED, THEN THOSE ENTI RE RECEIPTS CANNOT BE TAXED AND A REASONABLE PROFIT RATE BE APP LIED ON SAME. HE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 229 RELIED ON THE JUDGMENT OF CIT VS BALCHANDRA AJIT KUMAR 186 CTR 419 (M.P.) . 212. ON THE CONTRARY, LD. DEPARTMENTAL REPRESENTAT IVE STRONGLY RELIED ON THE ORDER OF THE LD. LOWER AUTHORITIES. F URTHER, AT THE RESIDENCE OF SHRI YASHOVARDHAN JAIN, WHO WAS THE GE NERAL MANAGER (FINANCE) OF THE ASSESSEE COMPANY, VARIOUS DOCUMENT S, LEDGER AND OTHER RECORDS WERE FOUND. SHRI JAIN AND SHRI HEMANT SONI WERE UNABLE TO EXPLAIN THESE DOCUMENTS. SHRI HEMANT SONI WAS THE HEAD OF THE COMPANY; AND SINCE HE WAS UNABLE TO EXPLAIN THE TRANSACTIONS, HE MADE A DECLARATION, SUO-MOTO REGAR DING THE UNDISCLOSED INCOME OF THE COMPANY. THE CONTENTION O F DURESS IS BASELESS. DECALARATION OF SHRI HEMANT SONI WAS BIND ING ON THE ASSESSEE-COMPANY. LD. COUNSEL FOR THE REVENUE FURTH ER CONTENDED THAT THE SURRENDER WAS MADE ON 01.02.2014 AND LATER ON, THE DECLARATION WAS REITEREATED ON 04.02.2014 AND THERE AFTER ON 05.03.2014. EVEN ON 30.05.2014, STATEMENT OF SHRI H EMANT SONI WAS RECORDED AND HE DID NOT SPECIFY ABOUT HIS RETRA CTION. RETRACTION LETTER WAS FILED ONLY ON 06.02.2016 AFTER TWO YEARS FORM THE DATE OF SEARCH. IN THE RETRACTION LETTER, IT WAS STATED THA T SHRI HEMANT SONI IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 230 COULD NOT WITHSTAND THE STRAIN, AND HENCE HE MADE T HE SURRENDER. SUCH RETRACTION WAS HIGHLY BELATED, AND FURTHER NO EXPLAINATION WAS GIVEN REGARDING THE DISCREPENCIES FOUND DURING THE COURSE OF SEARCH. HE ALSO SUBMITTED THAT A RETRACTION COULD H AVE BEEN ACCEPTABLE ONLY IF ASSESSEE EXPLAINS THE DISCREPENC IES FOUND DURING THE COURSE OF SEARCH. 213. LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE JUDGMENT OF RAKESH MAHAJAN VS CIT 214 CTR 218 (P & H) AND CONTENDED THAT AN ADMISSION CONSTITUTES BEST PIECE OF EVIDENCE. SUCH ADMISSION IS BINDING ON THE MAKER OF THE STATEMENT, UNLESS IT IS SHOWN BY BRINGING POSITIVE EVIDENCE ON RECORD THAT THE ADMIS SION WAS MADE MISTAKENLY. HE THEREFORE CONTENDED THAT NO SUCH POS ITIVE MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THE ADMISSION WA S MADE UNDER A MISTAKE. 214. IN RESPECT OF ON-MONEY RECEIPT ON HIGHLAND PRO JECT, LD. COUNSEL FOR THE REVENUE CONTENDED THAT MR. HEMANT S ONI HIMSELF CAME FORWARD ON BEHALF OF THE ASSESSEE COMPANY AND VOLUNTARILY STATED THAT THE 5-10% ON-MONEY WAS RECEIVED ON THE SALE OF PLOTS IN IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 231 HIGHLAND PROJECT. THE SAID DECLARATION IS THEREFORE BINDING ON THE ASSESSEE. 215. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, THE FACTS ON RECORDS AND THE CASE LAWS QUOTED BY BOTH THE SIDES. THROUGH GROUND NO. 2 TO 5 FOR ASSESSMENT YEAR 2013-14 AND GROUND NO.2 & 3 FOR ASSESSMENT YEAR 2014-15 THE ASSESSEE HAS RAISED A C OMMON ISSUE CHALLENGING THE FINDING OF LD. CIT(A) CONFIRMING TH E ADDITION MADE ON THE BASIS OF THE SURRENDER OF THE INCOME MADE BY THE ASSESSEE DURING THE COURSE OF SEARCH CONDUCTED U/S 132 OF TH E ACT. 216. BEFORE MOVING FURTHER TO EXAMINE THE FACTS WE WOULD LIKE TO GO THROUGH THE JUDICIAL PRECEDENTS WITH REGARD TO THE ISSUE THAT WHERE IN CASE NO CORROBORATIVE MATERIAL IS FOUND DURING T HE COURSE OF SEARCH HAVING ITS NEXUS WITH THE INCOME SURRENDERED DURING THE COURSE OF SEARCH WHETHER THE ADDITION CAN BE MADE M ERELY ON THE BASIS OF STATEMENT RECORDED DURING THE COURSEOF SEA RCH. THOUGH LD. COUNSEL FOR THE ASSESSEE HAS REFERRED AND RELIE D ON PLETHORA OF JUDGMENTS, WE FIND THAT THIS TRIBUNAL HAS DEALT WIT H THIS ISSUE. IN THE CASE OF ACIT VS SHRI SUDEEP MAHESHWARI, ITA 524/ IND/ 2013, VIDE ORDER DATED 13.02.2019 , THIS TRIBUNAL OBSERVED AS UNDER:- IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 232 6. IT IS THE CASE OF THE ASSESSEE THAT DURING THE COURSE OF SEARCH & SEIZURE, NO INCRIMINATING MATERIAL OR UNDISCLOSED I NCOME OR INVESTMENTS WERE FOUND. IT IS STATED THAT THE ASSESSEE WAS UNDE R MENTAL PRESSURE AND TIRED. THEREFORE, TO BUY PEACE OF MIND, HE ACCE PTED AND DECLARED RS.3 CRORES IN PERSONAL NAME. IT IS ALSO STATED TH AT THE CASE LAWS AS RELIED BY THE A.O. ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. THE ASSESSEE HAS RELIED ON THE DECISION OF THE HON' BLE SUPREME COURT RENDERED IN THE CASE OF PULLANGODE RUBBER PRODUCE C O. LTD. 91 ITR 18 (SC), WHEREIN THE HON'BLE COURT HAS HELD THAT ADMIS SION CANNOT BE SAID THAT IT IS CONCLUSIVE. RETRACTION FROM ADMISSION WA S PERMISSIBLE IN LAW AND IT WAS OPEN TO THE PERSON WHO MADE THE ADMISSIO N TO SHOW THAT IT WAS INCORRECT. HOWEVER, RELIANCE IS PLACED ON THE J UDGEMENT OF THE HON'BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. CHANDRAKUMAR JETHMAL KOCHAR (2015) 55 TAXMANN.COM 2 92 (GUJARAT), WHEREIN IT HAS BEEN HELD THAT MERELY ON THE BASIS O F ADMISSION THAT FEW BENAMI CONCERNS WERE BEING RUN BY ASSESSEE, ASSESSE E COULD NOT BE BASIS FOR MAKING THE ASSESSEE LIABLE FOR TAX AND TH E ASSESSEE RETRACTED FROM SUCH ADMISSION AND REVENUE COULD NOT FURNISH A NY RESPECTIVELY. THE A.O. FAILED TO CO-RELATE THE DISCLOSURES MADE I N THE STATEMENT WITH THE INCRIMINATING MATERIAL GATHERED DURING THE SEAR CH. THEREFORE, NO INFERENCE IS CALLED FOR IN THE FINDING OF THE LD. C IT(A) AND IS HEREBY AFFIRMED. GROUND RAISED BY THE REVENUE IS DISMISSED . 217. RECENTLY, IN AJIT SINGH MELHOTRA VS ACIT, IT(SS)A 63/ IND/ 2019 VIDE ORDER DATED 22.10.2020 , THIS TRIBUNAL AFTER CONSIDERING VARIOUS JUDGMENTS INCLUDING THOSEOF HON'BLE GUJARAT HIGH COURT AS WELL AS HON'BLE APEX COURT AND ALSO FOLLOWING ITS O WN DECISION IN IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 233 THE CASE OF ACIT VS SHRI SUDEEP MAHESHWARI (SUPRA) OBSERVED AS UNDER:- 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ADDITION WAS MADE ON THE BA SIS OF ADMISSION OF ASSESSEES SON DURING THE COURSE OF SEARCH. IT W AS CONTENDED BEFORE US, THAT ALL THESE DOCUMENTS WERE PROPERLY R ECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE PERSONS TO WHICH T HESE DOCUMENTS ACTUALLY PERTAINED. HOWEVER, WE FIND THAT THE ASSES SING OFFICER DID NOT ESTABLISH THE FACT THAT ANY OF THE DOCUMENTS AS FOUND AND SEIZED WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE PE RSONS TO WHICH THESE DOCUMENTS ACTUALLY PERTAINED. THEREFORE, WE F IND FORCE IN THE CONTENTION OF THE ASSESEE THAT WITHOUT REFERRING TO ANY OF THE DOCUMENTS WAS NOT BINDING ON THE ASSESSEE AND THE S AME CANNOT BE USED AGAINST THE ASSESSEE AS AN EVIDENCE AND THAT T OO IN SEARCH ASSESSMENT PROCEEDINGS. OUR VIEW IS SUPPORTED BY RA TIO LAID DOWN IN THE FOLLOWING JUDICIAL PRONOUNCEMENT: 1. M/S. ULTIMATE BUILDERS VS ACIT (ITA NO. 134/IND/ 2019 DATED 09.08.2019)(INDORE TRIBUNAL). 2. ACIT VS SUDEEP MAHESHWARI (ITA NO. 524/IND/2013 DATED 13.02.2019)(INDORE TRIBUNAL). 3. KAILASHBEN MANHARLAL CHOKSHI VS CIT (2010) 328 I TR 0411 (GUJ) 4. PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA (1973) 91 ITR 18 (SC) 7. ON CONSIDERATION OF ABOVE FACTS/SUBMISSIONS IN T HE LIGHT OF JUDICIAL PRONOUNCEMENTS (SUPRA) AND THE FACT THAT N O ADVERSE MATERIAL WAS FILED BY THE REVENUE TO CONTROVERT THE FACTUAL IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 234 SUBMISSION ADVANCED BEFORE US, WE DIRECT THE ASSESS ING OFFICER TO DELETE THE ADDITION OF RS. 10,00,00/-. 218. ON GOING THROUGH THE ABOVE JUDGMENTS IT IS JUD ICIALLY SETTLED THAT AN ADDITION MADE ON THE BASIS OF MERE SURRENDE R OF INCOME DURING THE COURSE OF SERACH WITHOUT REFERRING TO AN Y OF THE INCRIMINATING DOCUMENTS IS NOT BINDING ON THE ASSES SEE AND THE SAME CANNOT BE USED AGAINST THE ASSESSEE AS AN EVID ENCE. 219. NOW WE PROCEED TO EXAMINE THE FACTS OF THE INS TANT CASE IN THE LIGHT OF ABOVE STATED PRINCIPLE. IN THE INSTANT CA SE DURING THE COURSE OF SEARCH VARIOUS DOCUMENTS AND OTHER MATERI AL WERE FOUND AND SEIZED. ASSESSEE ACCEPTED TO SURRENDER RS.2 CR ORES FOR ASSESSMENT YEAR 2013-14 AND RS.28 CRORES FOR ASSESS MENT YEAR 2014-15 ON BEHALF OF THE VARIOUS GROUP CONCERNS AND THE INDIVIDUALS CONNECTED THERE TO. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. A.O MADE VARIOUS ADDITIONS BASED ON THE INCRIMINATING MATERIAL SEIZED DURING THE COURSE OF SEARCH. ALONG WITH THESE ADDITIONS LD. A.O ALSO MADE ADDITION FOR THE INCOME SURRENDERED DURING THE COURSE OF SEARCH. IT IS NOT IN DISPUTE THAT VARIOUS INCRIMINATING MATERIAL FOUND DURING THE COU RSE OF SEARCH WERE DULY CONSIDERED BY THE LD. A.O AND NECESSARY A DDITIONS WERE IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 235 MADE BASED ON THEM WHICH WERE CHALLENGED BEFORE LD. CIT(A) AND BEFORE US. WE HAVE ADJUDICATED AND DECIDED THE ISSU ES RAISED BEFORE US CONNECTED TO THE ADDITIONS MADE ON THE BASIS OF INCRIMINATING MATERIAL. AS REGARDS THE ADDITION MADE BY THE LD. A.O MADE ON THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SE ARCH THERE WAS NO REFERENCE TO ANY OTHER INCRIMINATING MATERIAL OT HER THAN THOSE CONSIDERED ABOVE FOR MAKING THE OTHER ADDITIONS. 220. EVEN BEFORE US LD. DEPARTMENTAL REPRESENTATIVE FAILED TO BRING ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH HAVING ITS NEXUS WITH THE IMPUGNED ADDITION AND WHI CH WAS NOT BEEN CONSIDERED BY THE LD. A.O WHILE MAKING THE OTH ER ADDITIONS. SO THERE REMAINS NO DISPUTE TO THE FACT THAT THERE IS NO MATERIAL TO SHOW THAT HOW THE ADDITION FOR RS. 30 CRORES WAS MA DE BY LD. A.O FOR UNDISCLOSED INCOME WITHOUT CORROBORATING WITH A NY INCRIMINATING MATERIAL FOUND DURING SEARCH. WHAT IS THE WORKING OF THIS RS. 30 CRORES, AND HOW IT WAS DIVIDED IN TWO Y EARS IS BASELESS EXCEPT THE CONFESSION OF SHRI HEMANT SONI. LD. AO H IMSELF POINTED IN THE ASSESSMENT ORDER THAT IT IS NOT POSSIBLE FOR THE AUTHORISED OFFICER U/S. 132 TO PUT EVERY MINUTE DETAIL OF THE DISCREPANCIES AND IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 236 DOCUMENTS IN THE STATEMENT RECORDED DURING THE SEAR CH PROCEEDINGS. IT IS CLEAR FROM THE FINDINGS OF THE L D. AO THAT THIS ADDITION IS PURELY BASED ON A MERE DECLARATION AND NOTHING ELSE. WE SEE THAT AFTER 4 DAYS OF SEARCH, ON 01.02.2014, IN QUESTION NO. 30, SHRI SONI MADE A DECLARATION THAT ON-MONEY OF 5 TO 10% WAS RECEIVED ON SALE OF LAND IN HIGHLAND PROJECT. FURTH ER IN THE SUBSEQUENT QUESTION, QUESTION NO. 31, HE MADE THE S URRENDER. SO FAR AS THE SURRENDER OF RS. 30 CRORES IN THE ASSESS EE COMPANY AND THE CONFESSION OF RECEIPT ON HIGHLAND PROJECT ARE C ONCERNED, THERE WAS NO BASIS FOR MAKING THIS SURRENDER. IN OUR VIEW ONLY SURRENDER OF INCOME WOULD NOT BIND THE ASSESSEE COMPANY. 221. WE THEREFORE IN THE LIGHT OF SETTLED JUDICIAL PRECEDENTS AND RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNA L IN THE CASE OF ACIT VS SHRI SUDEEP MAHESHWARI (SUPRA) AND AJIT SINGH MELHOTRA V/S ACIT (SUPRA) WHICH WERE DECIDED AFTER CONSIDERING THE SETTLED JUDICIAL PRECEDENCE BY THE HON'BLE COURTS ARE OF TH E CONSIDERED VIEW THAT LD. AO WAS NOT JUSTIFIED IN MAKING THE ADDITIO NS MERELY ON THE BASIS OF STATEMENT GIVEN DURING THE COURSE OF SEARC H WITHOUT REFERRING TO ANY INCRIMINATING MATERIAL IN THE CASE OF ASSESSEE- IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 237 COMPANY, AND FURTHER LD. CIT(A) WAS NOT JUSTIFIED I N ENHANCING THIS ADDITION. WE THEREFORE DELETE THE ADDITION OF RS. 4 ,34,08,100/- IN A.Y. 2013-14 AND RS. 28,00,00,000/- IN A.Y. 2014-15 . THUS, THESE GROUNDS OF THE ASSESSEE ARE ALLOWED. 222. NOW WE TAKE UP THE PENALTY APPEALS FILED AT TH E INSTANCE OF ASSESSEE. 223. ASSESSEES APPEAL ITA 922/IND/2019 IS THE PENA LTY APPEAL U/S. 271(1)(C) FOR A.Y. 2013-14 (RS. 8,52,700/-) AN D ASSESSEES APPEAL ITA 923/ IND/ 2019 IS THE PENALTY APPEAL U/S . 271AAB(1)(C) FOR A.Y. 2014-15 (RS. 16,80,00,000). THE PENALTY HA S BEEN LEVIED BY THE LD. CIT(A) IN RESPECT OF THE ENHANCEMENT DONE B Y THE LD. CIT(A) IN RELATION TO THE AMOUNT SURRENDERED DURING THE CO URSE OF SEARCH. 224. WE FIND THAT SINCE THE VERY BASIS OF LEVYING T HE PENALTY U/S. 271(1)(C) OF THE ACT AND 271AAB(1)(C) OF THE ACT I. E. THE ADDITION ALREADY STANDS DELETED BY US AS HELD BY US IN PRECE EDING PARAS, THERE REMAINS NO LEGS FOR THE IMPUGNED PENALTIES TO STAND FOR AND THE SAME ARE THEREFORE DELETED. ACCORDINGLY ASSESS EES APPEAL ITA 922/IND/2019 RELATING TO THE PENALTY LEIVED U/S. 2 71(1)(C) FOR A.Y. IT(SS)A NO.83,84,86,87,90,91,109,110 & ITA, NO.922 &923/IND/2019 AG8 VENTURES LTD. 238 2013-14 AND ASSESSEES APPEAL ITA 923/ IND/ 2019 FO R THE PENALTY LEVIED U/S. 271AAB(1)(C) FOR A.Y. 2014-15 ARE ALLO WED. 225. IN THE RESULT APPEALS OF THE REVENUE BEARING N O.IT(SS)A NO.83,84,86,109 & 100/IND/2019 FOR ASSESSMENT YEARS 2008-09, 2009-10, 2011-12, 2013-14 & 2014-15 RESPECTIVELY AR E PARTLY ALLOWED, REVENUE APPEAL BEARING NO.IT(SS)A NO.87/IN D/2019 FOR ASSESSMENT YEAR 2012-13 IS PARTLY ALLOWED FOR STATI STICAL PURPOSES, ASSESSEES APPEAL NO.IT(SS)A NO.90&91/IND/2019 FOR ASSESSMENT YEAR 2013-14 & 2014-15 ARE PARTLY ALLOWED, ASSESSEE S APPEAL BEARING NO.IT(SS)A NO.83,84,86,109&110/IND/2019&ITA NO.922 & 923/IND/2019 FOR ASSESSMENT YEAR 2013-14& 2014-15 A RE ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.02.202 1. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 16 FEBRUARY, 2021 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT. REGISTRAR, I.T.A.T., INDORE
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1:1 Consultation on Business Valuations
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