Rajdhani Systems & Estates Pvt. Ltd., Bhubaneswar V. ACIT, Circle-2(2), Bhubaneswar

ITSSA 10/CTK/2016

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3448 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2000-2001
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUNAL SINGH
• Assessee Lawyers: B D OJHA
• Keywords: Document seized; Deemed to accrue or arise in india; Commercial expediency; Documents seized
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ IT ( SS) A NO. 10 TO 16 / CTK /20 1 6 ( / ASSESSMENT YEAR :20 00 - 2001 TO 2006 - 2007 ) RAJDHANI SYSTEMS &ESTATES (P) LTD., A/170, SAHID NAGAR, BHUBANESWAR VS. ACIT, CIRCLE - 2 (2), BHUBANESWAR ./ PAN NO. : AA BCR 8271 L ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ IT (SS) A NO. 32 TO 35 /CTK/201 6 ( / A Y S : 2002 - 03, 2003 - 04, 2005 - 06 & 2006 - 07 ) ACIT, CORPORATE CIRCLE - 1 (2), BHUBANESWAR VS. RAJDHANI SYSTEMS &ESTATES (P) LTD., A/170, SAHID NAGAR, BHUBANESWAR ./ ./ PAN/GIR NO. : AA BCR 8271 L ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI B.D.OJHA , AR /REVENUE BY : SHRI KUNAL SINGH , CITDR / DATE OF HEARING : 09 / 10 /201 7 / DATE OF PRONOUNCEMENT 12/10 /201 7 / O R D E R PER BENCH : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE SEPARATE ORDERS OF THE CIT(A) - II , BHUBANESWAR ALL DATED 08.02.2016 FOR THE ASSESSMENT YEARS 2000 - 2001 TO 2006 - 2007 . 2. SINCE THE ISSUE AND FACTS INVOLVED IN TH ESE APPEAL S ARE INTERCONNECTED AND COMMON, THEY ARE BEING HEARD AND DISPOSED OFF BY CONSOLIDATED ORDER . 3. FIRST WE SHALL TAKE UP THE APPEALS FILED BY THE ASSESSEE IN IT (SS) A NOS.10,11,12,13/CTK/2016 FOR THE ASSESSMENT YEARS 2000 - 2001 TO 2003 - 04, THE ASSESSEE HAS RAISED COMMON GROUNDS IN CONNECTED APPEALS, RAJDHANI SYSTEMS & ESTATES (P) LTD. 2 HOWEVER, AT THE TIME OF HEARING THE LD. AR OF THE ASSESSEE HAS RAISED ADDITIONAL GROUND FOR THESE ASSESSMENT YEARS ONLY CHALLENGING THE VALIDITY OF ISSUE OF NOTICE U/S.143(2) OF THE ACT , AS UNDER : - BECAU SE THAT THE LEARNED ASSESSING OFFICER ERRED IN LAW AS WELL AS IN FACT BY MAKING ADDITIONS TO THE TOTAL INCOME TO THE ASSESSEE WHICH ARE NOT BASED ON ANY SEIZED MATERIAL AS THE ASSESSMENT FOR THE IMPUGNED YEAR WAS COMPLETED U/S.143(1) OF THE ACT AND THE TIM E LIMIT FOR ISSUING THE NOTICE U/S.143(2) OF THE ACT HAS EXPIRED ON THE DATE OF SEARCH. WHEREAS THE LD. DR HAS VEHEMENTLY OPPOSED TO THE ABOVE ADDITIONAL GROUND RAISED BY THE ASSESSEE. 4. BEFORE US THE LD. AR SUBMITTED THAT THIS ADDITIONAL GROUND PLAYS A VITAL ROLE AND HAVE A BEARING ON THE ASSESSMENT WHERE THE ASSESSMENT HAS BEEN MADE BY THE AO WITH ADDITIONS NOT BASED ON THE SEIZED MATERIAL AND ALSO THE TIME LIMIT FOR ISSUE OF NOTICE U/S.143(2) OF THE ACT WAS EXPIRED ON THE DATE OF SEARCH. THE LD. AR FUR THER SUBSTANTIATE D HIS ARGUMENTS AND SUBMITTED COPY OF INTIMATION U/S.143( 1 ) OF THE ACT FOR THE ASSESSMENT YEARS 2000 - 2001 TO 2003 - 2004 AND PRAYED FOR ADMITTING THE ADDITIONAL GROUND AND ALLOW THE APPEAL . CONTRA, LD. DR OPPOSED TO THE GROUND AND THE MATERIAL FILED AND RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD., (1998) 229 ITR 383 (SC) ON THE FACTS EMERGED OUT OF THE ASSESSMENT PROCEEDINGS . 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WITHOUT GOING INTO THE MERITS OF THE CASE, AT THIS STAGE, WE CONSIDER IT APPROPRIATE FIRST TO DECIDE THE LEGAL GROUND OF ISSUE OF NOTICE U/S.143(2) OF THE ACT RAISED BEFORE US AS ADDITIONAL GROUND BY THE ASSESSEE. PRIMA FACIE, THE LD. AR SUPPORTED HIS ARG UMENTS BY PROVIDING RAJDHANI SYSTEMS & ESTATES (P) LTD. 3 THE COPIES OF THE INTIMATION U/S.143(1) OF THE ACT AND ALSO THE TIME LIMIT FOR ISSUE OF NOTICE U/S.143(2) OF THE ACT HAS EXPIRED ON THE DATE OF SEARCH WHEREAS LD. DR HAS OPPOSED TO THIS ADDITIONAL GROUND. ACCORDINGLY, WE CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD (SUPRA) ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL AND REMIT THIS ADDITIONAL GROUND TO THE FILE OF CIT(A) TO ADJUDICATE AND PASS A SPEAKING ORDER ON MERITS. IT IS ALSO RELEVANT TO MENTION HERE THAT IF THE CIT(A) FOUND THE NOTICE U/S.143(2) OF THE ACT HITS THE QUESTION OF LIMITATION, THEN THE ADDITIONS MADE BY THE AO WILL HAVE NO LEGS TO STAND , HOWEVER, THE ADDITIONS CAN BE MADE ON THE BASIS OF SEIZED MATERIAL . KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ARGUMENTS RAISED BY THE LD. AR, WE ARE OF THE VIEW THAT THE ADJUDICATION OF GROUNDS OF APPEAL RAISED BY THE ASSESSEE AGAINST THE ADDITIONS MADE BY THE AO AND CONFIRMED BY THE CIT(A) ARE NOT NECESSARY AT THIS STAGE AND THE ISSUE IS REMITTED TO THE FILE OF CIT(A) . 6. THUS, APPEAL FILED BY THE ASSESSEE IN IT (SS) A NOS.10,11,12,13/CTK/2016 FOR THE ASSESSMENT YEARS 2000 - 2001 TO 2003 - 04 ARE ALLOWED FOR STATIST ICAL PURPOSES. 7. REGARDING CROSS APPEALS FILED BY THE REVENUE IN IT(SS)A NOS.32&3 3 /CTK/2016 FOR THE ASSESSMENT YEARS 2002 - 03 & 2003 - 04 , SINCE WE HAVE ALREADY SET ASIDE THE APPEALS OF THE ASSESSEE ON THE BASIS OF CONSIDERATION OF ADDITIONAL GROUND RAISED B Y THE ASSESSEE ON THE QUESTION OF LIMITATION OF ISSUE OF NOTICE U/S.143(2) TO THE FILE OF CIT(A). RAJDHANI SYSTEMS & ESTATES (P) LTD. 4 ACCORDINGLY, THESE TWO APPEALS OF THE REVENUE FOR THE ASSESSMENT YEARS 2002 - 03 & 2003 - 04 ARE ALSO REMIT TED TO THE FILE OF CIT(A) WHO WILL VERIFY AND PASS A S PEAKING ORDER ON MERITS. 8. THUS IT (SS) A NOS. 32&33/CTK/2016 ARE ALLOWED FOR STATISTICAL PURPOSES. 9 . NOW WE SHALL TAKE UP THE APPEALS FILED BY THE ASSESSEE IN IT(SS)A NOS.14 TO 16/CTK/2016 FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07 AND APPEALS FILED BY THE REVENUE IN IT(SS)A NOS. 34&35/CTK/2016 FOR THE ASSESSMENT YEARS 2005 - 06 & 2006 - 07 ANALOGOUSLY. 10 . GROUND NO.1 IN ASSESSEES APPEAL FOR THE ASSESSMENT YEARS 2004 - 05, 2005 - 06 & 2006 - 07 IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION OF RS. 2,05 ,50,268/ - FOR THE ASSESSMENT YEAR 2004 - 05, RS.2,13,19,095/ - FOR ASSESSMENT YEAR 2005 - 06 AND RS.1,63,31,646/ - FOR THE ASSESSMENT YEAR 2006 - 07, RESPECTIVELY, BEING 25% OF THE INCREMENTAL ADVANCE RECEIVED FROM CUSTOMERS. 11 . FACTS GIVING RISE TO THE ABOVE GR OUND ARE THAT THE AO FOR THE ASSESSMENT YEAR 2004 - 05 DISALLOWED 25% OF INCREMENTAL ADVANCES RECEIVED FROM CUSTOMERS OF RS. 8,82,01,074/ - AND ADDED RS.2,05,50,268/ - ON ACCOUNT OF UNEXPLAINED LIABILITY. 12 . ON APPEAL, THE CIT(A) CONFIRMED THE ADDITIONS AFTER OBSERVING AS UNDER : - DECISION : IN COURSE OF SEARCH 'OPERATION, IT CAME TO THE KNOWLEDGE OF THE INVESTIGATION WING THAT THE APPELLANT HAD MAINTAINED DUPLICATE SET OF BOOKS OF ACCOUNT AND A COMPARISON OF THE ENTRIES WITH THE AUDITED BOOKS OF ACCOUNT, MANY ENTRIES OF RECEIPTS AND EXPENSES ARE NOT RECORDED IN BOOKS OF ACCOUNT ON THE BASIS OF WHICH RETURNS WERE FILED. OTHER INCRIMINATING DOCUMENTS AS PER THE RAJDHANI SYSTEMS & ESTATES (P) LTD. 5 NARRATIONS FOUND IN THE APPRAISAL REPORT WERE ALSO SEIZED AND IMPOUNDED. ON PERUSAL OF THE CIRCUMSTANC ES LEADING TO ASSESSMENT U/S.144, ORDER OF THE LD. CIT(APPEALS), ORDER OF THE HON'BLE TRIBUNAL, SUBMISSION OF THE APPELLANT COMPANY IN RE - ASSESSMENT PROCEEDING, IT APPEARS THAT THE APPELLANT COMPANY RECEIVED ADVANCE IN SMALL INSTALLMENTS FROM HUGE CUSTOMER BASE. THE APPELLANT ITSELF COULD NOT ESTABLISH THE CORRECTNESS OF THE ADVANCE TAKEN FROM SUCH HUGE NUMBER OF CUSTOMERS IN COURSE OF SEARCH OPERATION AND ORIGINAL ASSESSMENT PROCEEDING U/S.153A OF THE ACT. IT IS NOT POSSIBLE BY ANY INVESTIGATIVE AGENCY TO VERIFY. THE CUSTOMER BASE CONSISTING OF HUGE NUMBER OF CUSTOMERS. IT WAS IN COURSE OF REMAND PROCEEDING, THE A.O. MADE EXTENSIVE EXERCISE BY TAKING ABOUT TWO AND HALF YEARS AND REPORTED THAT THE ENTIRE OUTSTANDING OF ADVANCES ARE NOT VERIFIABLE AND THEREFO RE, AD HOC DISALLOWANCE OF 25% OF TOTAL ADVANCE WAS PROPOSED FOR ADDITION. THE LD. CIT(APPEALS) AGREED WITH THE A.O. AND DECIDED THE ISSUE BY CONFIRMING ADDITION OF RS.2,05,50,269/ - ON THIS COUNT. THE APPELLANT COULD NOT MAKE ANY PROGRESS IN GETTING THE EN TIRE ADVANCE VERIFIABLE EITHER BEFORE THE A.O. IN COURSE OF RE - ASSESSMENT PROCEEDING OR BEFORE THE UNDERSIGNED IN COURSE OF APPELLATE PROCEEDING EXCEPT MAKING SUBMISSION SUMMARIZED ABOVE. EVEN THE ARGUMENT OF THE LD. A.R. THAT THE APPELLANT HAS REFUNDED RS .50.50 CRORE TO THE CUSTOMERS AGAINST THE ADVANCE IS A MERE SUBMISSION ONLY SINCE NO DETAIL ABOUT THE CUSTOMERS LIKE NAME AND ADDRESS, DATE OF ADVANCE RECEIVED, DATE OF REPAYMENT HAS BEEN PRODUCED TO SUBSTANTIATE THE CLAIM OF REPAYMENT OF OUTSTANDING ADVAN CE OF A.Y.2004 - 05. THE CIT(APPEALS) APPRECIATED THE FACTS BROUGHT ON TO THE RECORD BY THE A.O. IN THE REMAND REPORT AND DECIDED THE ISSUE CONFIRMING 25% OF THE TOTAL ADVANCE FOR ASSESSMENT AS INCOME IN THE HANDS OF THE APPELLANT COMPANY FOR THE YEAR UNDER APPEAL WITH HIS OBSERVATION THAT THE APPELLANT WANTS TO TAKE ADVANTAGE OF INHERENT DIFFICULTY IN AND TRUE TO SUCH OBSERVATION, THE APPELLANT CANNOT PRODUCE ANYTHING EXTRA BY WAY OF EVIDENCE OR COGENT ARGUMENT THAN WHATEVER WAS PRODUCED BEFORE THE CIT(APPEA LS) IN COURSE OF ORIGINAL APPELLATE PROCEEDING TO DEMONSTRATE THE CORRECTNESS OF THE ENTIRE ADVANCE, RATHER ATTEMPT WAS MADE TO SHIFT THE ONUS BY CONTENDING THAT THE A.O. WAS FREE TO EXAMINE AS MANY CUSTOMERS AS HE WANTED TO ASCERTAIN THE CORRECTNESS OF TH E CLAIM. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE AO IS NOT LEFT WITH ANY OPTION BUT TO ASSESS 25% OF THE ADVANCES AS DEEMED INCOME OF THE YEAR, THE PERCENTAGE OF DISALLOWANCE PROPOSED BY THE AO IN COURSE OF REMAND PROCEEDINGS AND ENDORSED BY THE CIT(A) IN ITA NO. 0294/2007 - 08 DATED 30.06.2011. IT IS HELD THAT THE ADDITION CONFIRMED BY MY PREDECESSOR AT RATE APPLIED ON AD - HOC BASIS IS REASONABLE AND IN ABSENCE OF ANY CLINCHING EVIDENCE PRODUCED OVER AND ABOVE THE EVIDENCE PRODUCED I N COURSE OF REMAND PROCEEDING, DISALLOWANCE IS SUSTAINED AT 25% OF THE TOTAL ADVANCE AND HENCE, ADDITION OF RS. 2,05,50,268/ - MADE ON THIS COUNT IS CONFIRMED. RAJDHANI SYSTEMS & ESTATES (P) LTD. 6 SIMILARLY, THE CIT(A) CONFIRMED THE ADDITION OF RS. RS.2,13,19,095/ - FOR ASSESSMENT YEAR 2005 - 0 6 AND RS.1,63,31,646/ - FOR THE ASSESSMENT YEAR 2006 - 07, RESPECTIVELY. 13 . LD. AR OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF CIT(A). 14 . WE FIND THAT A SIMILAR ISSUE WHIC H CAME UP BEFORE THE TRIBUNAL IN ONE OF THE GROUP CASES IN CASE OF HI - TECH ESTATES & PROMOTERS PVT. LTD., IN IT(SS)A NO. 03 TO 09/CTK/2017 FOR THE ASSESSMENT YEARS 2000 - 01 TO 2006 - 07, WHEREIN THE TRIBUNAL VIDE ITS ORDER DATED 31.08.2017 REMITTED THE MATTER BACK TO THE FILE OF AO WITH THE FOLLOWING OBSERVATIONS : - 15. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT A SEARCH & SEIZURE OPERATION WAS CONDUC TED IN HI - TECH GROUP ON 30.9.2005 AND BOOKS OF ACCOUNT IDENTIFIED AS NP - 1 TO NP - 67 WERE SEIZED. THEREAFTER, NOTICE U/S.153A WAS ISSUED ON 31.8.2006 TO THE ASSESSEE COMPANY AND ASSESSMENT U/S.153A (B)(/144 OF THE ACT COMPLETED ON 31.12.2007 AT AN INCOME OF RS.4,72,10,484/ - IN ASSESSMENT YEAR 2001 - 02, AT AN INCOME OF RS.1,51,31,691/ - IN ASSESSMENT YEAR 2000 - 2001, AT AN INCOME OF RS.10,96,72,470/ - IN ASSESSMENT YEAR 2002 - 03, AT AN INCOME OF RS.18,27,05,620/ - IN ASSESSMENT YEAR 2003 - 04, AT AN INCOME OF RS.22,7 0,16,340/ - IN ASSESSMENT YEAR 2004 - 05, AT INCOME OF RS.5,00,00,000/ - IN ASSESSMENT YEAR 2005 - 06 AND RS.5,00,00,000/ - IN ASSESSMENT YEAR 2006 - 07. THEREAFTER, THE MATTER TRAVELLED TO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 14.12.2012 IN IT (SS) NOS.5 7 TO 63/CTK/2011 FOR THE ASSESSMENT YEARS 2000 - 2001 TO 2006 - 07 SET ASIDE THE ORDER OF THE CIT(A) FOR ALL THE YEARS UNDER CONSIDERATION AND RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER AND DIRECTED THE ASSESSING OFFICER TO MAKE DENOVO ASSESSMEN T ON THE BASIS OF RETURNS TO BE FILED BY THE ASSESSEE IN PURSUANCE TO NOTICE U/S.153A, WHICH LD COUNSEL FOR THE ASSESSEE HAD AGREED BEFORE THE BENCH TO FILE WITHIN THREE MONTHS FROM THE DATE OF RECEIPT OF THIS ORDER. PURSUANT TO THIS DIRECTION OF THE TRIB UNAL, THE ASSESSEE FILED RETURN OF INCOME U/S.153A AT AN INCOME OF RS.55,392/ - IN ASSESSMENT YEAR 2001 - 02, AT AN INCOME OF RS.52,156/ - IN ASSESSMENT YEAR 2000 - 2001, AT AN INCOME OF RS.1,44,736/ - IN ASSESSMENT YEAR 2002 - 03, AT AN INCOME OF RS.2,55,370/ - IN ASSESSMENT YEAR 2003 - 04, AT AN INCOME OF RAJDHANI SYSTEMS & ESTATES (P) LTD. 7 RS.3,32,607/ - IN ASSESSMENT YEAR 2004 - 05, AT AN INCOME OF RS.2,95,575/ - IN ASSESSMENT YEAR 2005 - 06 AND AT AN INCOME OF RS.1,08,286/ - IN ASSESSMENT YEAR 2006 - 07. 16. THE ASSESSING OFFICER THEREAFTER MADE ASSESSMENT AT AN INCOME OF RS.82,79,500/ - IN ASSESSMENT YEAR 2001 - 02, AT AN INCOME OF RS.38,07,040/ - IN ASSESSMENT YEAR 2000 - 2001, AT AN INCOME OF RS.107,43,398/ - IN ASSESSMENT YEAR 2002 - 03, AT AN INCOME OF RS.3,08,94,665/ - IN ASSESSMENT YEAR 2003 - 04, AT AN INCOME OF RS.3,60,13,362/ - IN ASSESSMENT YEAR 2004 - 05, AT AN INCOME OF RS.1,24,96,690/ - IN ASSESSMENT YEAR 2005 - 06 AND AT AN INCOME OF RS.1,64,20,570/ - IN ASSESSMENT YEAR 2006 - 07. 17. IN AN ASSESSMENT MADE, THE ASSESSING OFFICER HAS MADE ADDITION UNDER THE HEAD A DVANCE FROM CUSTOMERS @ 25% OF THE ADVANCES RECEIVED BY THE ASSESSEE DURING RESPECTIVE YEARS UNDER CONSIDERATION. THE ARGUMENT OFLD A.R. OF THE ASSESSEE IS THAT THERE WAS DIRECTION OF THE TRIBUNAL TO MAKE DENOVO ASSESSMENT AFTER CONSIDERING THE RETURN O F INCOME TO BE FILED BY THE ASSESSEE AND OTHER MATERIALS. THE ASSESSING OFFICER WHILE MAKING THESE ASSESSMENTS AFTER THE SET ASIDE OF THE ASSESSMENT ORDERS BY THE TRIBUNAL, THE SAME VERY ADDITIONS WERE MADE WHICH WERE IN THE SET ASIDE ASSESSMENT ORDERS. HE SUBMITTED THAT THE ONLY BASIS FOR MAKING ADDITION OF 25% OF THE ADVANCES RECEIVED FROM CUSTOMERS IS THAT FOR ASSESSMENT YEAR 2008 - 09, IT WAS FOUND THAT INCREMENTAL ADVANCES WERE RECEIVED FROM 3200 CUSTOMERS. OUT OF WHICH, 514 CUSTOMERS WERE FROM WHOM C ASH WAS RECEIVED BUT NO LAND WAS ALLOTTED TO THEM. THESE TRANSACTIONS WERE CONSIDERED BY THE ASSESSING OFFICER AS SUSPICIOUS. IN ORDER TO VERIFY THE SAME, A SMALL SAMPLE OF 50 CUSTOMERS WERE SELECTED TO TEST CHECK AND SUMMONS WERE ISSUED, 32 OF THE PERSO NS TURNED UP AND APPEARED BEFORE THE ASSESSING OFFICER AND CONFESSED UNDER OATH TO HAVE PAID THE AMOUNT AND HAVE NOT RECEIVED THE LAND. THE ASSESSING OFFICER THEREAFTER HAS STATED IN THE REMAND REPORT DATED 28.3.2011 THAT SINCE THE SAMPLE SIZE WAS OF CU STOMER BASE OF 3200 WAS TOO SMALL, THEREFORE, A REVISED METHOD WAS DEVISED TO CHECK THE CUSTOMER ADVANCE. HE FURTHER NOTED THAT THE ASSESSEE FAILED TO GIVE NAME AND ADDRESS OF ABOUT 25% OF CUSTOMERS IN THE ASSESSMENT YEAR 2008 - 09 AND AS THE SAME CUSTOME R BASE WAS HANDLED, THEREFORE, SAME RATIO MAY BE APPLIED AND 25% OF INCREMENTAL CUSTOMER WAS TREATED AS NOT VERIFIABLE AND ADDITIONS WERE MADE IN THE YEARS UNDER APPEAL, WHICH WAS CONFIRMED BY THE CIT(A). IT WAS THEREFORE, THE ARGUMENT OF LD A.R. OF TH E ASSESSEE THAT NO INCREMENTAL MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND AS THE ADDITIONS HAVE BEEN MADE ON ESTIMATE WITHOUT ANY BASIS , SAME SHOULD BE DELETED. 18. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES AND ARGUED T HAT THE ASSESSEE FAILED TO PRODUCE NAMES AND ADDRESS OF THE CUSTOMERS FROM WHOM IT HAS RECEIVED ADVANCE AND HENCE, THE ASSESSING OFFICER HAS MADE A VERY REASONABLE RAJDHANI SYSTEMS & ESTATES (P) LTD. 8 ADDITION ON THE BASIS OF ESTIMATE. THEREFORE, HE SUBMITTED THAT THE ORDER OF THE CIT(A) SH OULD BE CONFIRMED. 19. IN THE ABOVE BACKGROUND OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT ORDERS HAVE BEEN FRAMED IN THE YEARS UNDER APPEAL WITHOUT THOROUGHLY EXAMINING THE SEIZED MATERIALS. THE ASSESSING OFFICER HAS MADE ASSESSMENT B Y MAKING A SHORT CUT OF THE ENTIRE PROCEDURE AND ESTIMATING UNVERIFIED CUSTOMERS AT 25% OF THE INCREMENTAL ADVANCES RECEIVED BY THE ASSESSEE DURING THE YEARS AND MAKING ADDITION THEREOF. IN OUR CONSIDERED VIEW, SUCH AN APPROACH OF THE ASSESSING OFFICER C ANNOT BE SUSTAINED IN LAW. IT IS ALSO OBSERVED THAT THE STATEMENT OF THE ASSESSING OFFICER TO THE EFFECT THAT NAME AND ADDRESS OF ABOUT 25% OF THE PERSONS FROM WHOM FRESH ADVANCE WAS RECEIVED DURING THE ASSESSMENT YEAR 2008 - 09 COULD NOT BE FURNISHED BY THE ASSESSEE COULD NOT BE CONTROVERTED BY THE ASSESSEE. HOWEVER, THE AMOUNT WHICH WAS CLAIMED TO HAVE BEEN RECEIVED FROM SUCH CREDITORS HAS NOT BEEN BROUGHT ON RECORD. IT IS IMPERATIVE ON THE PART OF THE ASSESSING OFFICER TO CONSIDER SEIZED MATERIALS IN ITS ENTIRETY AND THEREAFTER DRAW A CONCLUSION BASED ON FACTS AND MAKE ADDITION TO THE INCOME OF THE ASSESSEE IF HE ARRIVE AT A CONCLUSION THAT THE SEIZED MATERIALS INCLUDE SAME UNDISCLOSED INCOME OF THE ASSESSEE. IF AFTER VERIFYING THE SEIZED MATERIALS, HE C ANNOT DRAW SUCH A CONCLUSION THAT SEIZED MATERIALS INCLUDE UNDISCLOSED INCOME OF THE ASSESSEE, HE CANNOT MAKE ADDITION TO THE INCOME OF THE ASSESSEE EVEN FOR A SINGLE RUPEE. WE FIND THAT THE ASSESSING OFFICER HAS NOT DONE HIS JOB AS WAS EXPECTED FROM HIM PROPERLY AND THOROUGHLY AND, THEREFORE, WE ARE LEFT WITH NO OPTION AND ARE CONSTRAINED TO RESTORE THE MATTER BACK TO HIS FILE FOR ADJUDICATING THE ISSUE AFRESH AND HOPE THAT THIS TIME THE ASSESSING OFFICER WILL DO A THOROUGH INVESTIGATION OF THE SEIZED MA TERIAL AND THEREAFTER, PASS A WELL - REASONED ORDER ON THE ABOVE ISSUE. HENCE, THIS GROUND OF APPEAL FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION IS ALLOWED FOR STATISTICAL PURPOSES. AS THE FACTS IN THE PRESENT APPEAL ARE IDENTICAL, RESPECTFULLY FOLLOW ING THE PRECEDENT, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND RESTORE THIS ISSUE BACK TO THE FILE OF AO WITH SAME DIRECTION AS GIVEN IN THE CASE OF HI - TECH ESTATES & PROMOTERS PVT. LTD. (SUPRA) . THUS, GROUND NO.1 IN ASSESSEES APPEALS FOR THE ASSES SMENT YEARS 2004 - 05, ,2005 - 06 & 2006 - 07 ARE ALLOWED FOR STATISTICAL PURPOSES . 15 . GROUND NO. 2 IN ASSESSEES APPEAL FOR THE ASSESSMENT YEARS 2004 - 05, 2005 - 06 & 2006 - 07 IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE RAJDHANI SYSTEMS & ESTATES (P) LTD. 9 ADDITION OF RS. 11,55,750 / - UNDER THE HEA D DEVELOPMENT EXPENSES FOR THE ASSESSMENT YEAR 200 4 - 05 AND RS. 18,74,080/ - FOR THE ASSESSMENT YEAR 200 5 - 0 6 AND RS.27,65,790/ - FOR THE ASSESSMENT YEAR 2006 - 07 . WHEREAS THE GROUND NO.1 IN REVENUES APPEALS FOR THE ASSESSMENT YEARS 2005 - 06 & 2006 - 07 IS AGAINST RESTRICTING THE ADDITION OF RS.18,74,080/ - FOR THE ASSESSMENT YEAR 2005 - 06 AND RS.27,65,790/ - FOR THE ASSESSMENT YEAR 2006 - 07, RESPECTIVELY ON ACCOUNT OF DEVELOPMENT CHARGES. 16 . CONCISE FACTS RELATING TO THE ABOVE GROUND ARE THAT THE ASSESSEE COMPANY IS IN REAL ESTATE BUSINESS AND ACTIVITIES OF THE COMPANY IS TO BUY AND SELL LAND. THE LAND DEVELOPMENT EXPENSES CONSISTS OF AMOUNT PAID FOR SAND FILLING, LAYING OF ROADS, ROAD SITE PLANTATION OF THE PROJECT, CONSTRUCTION OF CULVERTS AND AMOUNT PAID OVER AND A BOVE THE REGISTERED VALUE OF THE LAND TO THE LAND OWNERS. THE ASSESSEE CONTENDED THAT THE COMPANY PAID MORE THAN THE REGISTERED VALUE OR ELSE LAND IS NOT AVAILABLE FROM THE SELLERS. THE ASSESSEE COMPANY HAD PAID MONEY TO THE SELLERS TO ACQUIRE THE LAND WHI CH IS THE MAIN BUSINESS OF THE ASSESSEE. THE EXTRA AMOUNT SO PAID IS THE PREMIUM FOR SALE OF LAND BY SELLER WHICH IS A GENERAL PRACTICE TO SELL AND PURCHASE OF LAND. THE AOS OBSERVATION THAT PAYMENTS ARE NOT IN THE NATURE OF DEVELOPMENT CHARGES, IS NOT CORRECT. THE A O WITHOUT ENQUIRING AS TO WHETHER THE COMPANY HAS PAID SUCH AMOUNT TO THE SELLERS OR NOT, ADDED THE AMOUNT OF RS. 11,55,750 / - FOR THE ASSESSMENT YEAR 200 4 - 05, RS.18,74,080/ - FOR ASSESSMENT YEAR 2005 - 06 AND RS. 27,65,790/ - FOR THE ASSESSMENT YEAR 200 6 - 07 . RAJDHANI SYSTEMS & ESTATES (P) LTD. 10 1 7 . ON APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANCE OF LAND DEVELOPMENT EXPENSES OBSERVING THAT THE NATURE OF THE EXPENDITURE AS EXPLAINED BY THE LD.A.R., IS AN ADMISSIBLE EXPENDITURE U/S.37(1) OF THE ACT SINCE IT HAS DIRECT NEXUS WITH THE BUSINESS ACTIVITI ES OF THE ASSESSEE, HOWEVER, LD. AR COULD NOT FILE ANY EXPLANATION REGARDING APPLICABILITY OF SEC.40A(3) OF THE ACT ON DEVELOPMENT OF CHARGES OF RS.57,78,735/ - PAID IN CASH AND THEREFORE, CIT(A) RESTRICTED THE ADDITION TO 20% OF RS.57,78,735/ - I.E. 11,55,7 50/ - FOR THE ASSESSMENT YEAR 2004 - 05. SIMILARLY, THE CIT(A) RESTRICTED THE ADDITION MADE BY THE AO TO RS. 18,74,080/ - FOR ASSESSMENT YEAR 2005 - 06 AND RS.27,65,790/ - FOR ASSESSMENT YEAR 2006 - 07, RESPECTIVELY. 18 . LD. AR REITERATED THE SUBMISSION MADE BEFORE THE LOWER AUTHORITIES. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 19 . WE FIND THAT WHILE DECIDING THE SIMILAR ISSUE IN ONE OF THE GROUP CASES IN CASE OF HI - TECH ESTATES & PROMOTERS PVT. LTD., IN IT(SS)A NO.03 TO 09/CTK/2017 FOR T HE ASSESSMENT YEARS 2000 - 01 TO 2006 - 07, WHEREIN THE TRIBUNAL VIDE ITS ORDER DATED 31.08.2017 REMITTED THE MATTER BACK TO THE FILE OF AO WITH THE FOLLOWING OBSERVATIONS : - 51. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE EXCESS CASH PAYMENT TO THE SELLERS OF LAND AS PREMIUM AMOUNT WHICH HAS BEEN DEBITED UNDER THE HEAD LAND DEVELOPMENT CHARGES. ACCORDING TO THE ASSESSING OFFICER, EXCESS CASH PAYMENTS MADE TO LAND SELLERS IN THE SHAPE OF PREMIUM AMOUNT CANNOT BE HELD TO BE IN THE NATURE OF DEVELOPMENT EXPENSES AND, THEREFORE, DISALLOWED DEDUCTION FOR THE SAME U/S.37 OF THE ACT. 52. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT THE EXTRA PAYMENT MADE TO THE SELLERS OF THE LAND IN EXCESS OF THE BENCH MARK PRICE FIXED BY STATE GOVERNMENT FOR COLLECTING STAMP DUTY WAS RAJDHANI SYSTEMS & ESTATES (P) LTD. 11 AKIN TO PREMIUMS PAID TO SELLERS OF LAND FOR PURCHASING THEIR LAND AT THE PREVAILING MARKET PRICE IN SUCH BUSINESS. IT WAS SUBMITTED THAT THE ASSESSEE ENTERS INTO WRITTEN OR VERBAL AGREEMENT WITH THE OWNERS OF THE LAND FOR PAYMENT OF A FIXED SUM AS CONSIDERATION ON PREVAILING MARKET PRICE OF THE LAND OF THE PARTICULAR AREA. AFTER THE OWNER OF THE LAND IS PAID IN FULL THE AGREED AMOUNT, THE LAND IS REGISTERED IN THE NAME OF THE ASSESSEE. AT THE TIME OF REGISTRATION OF LAND, THE AMOUNT OF CONSIDERATION MENTIONED IN THE CONVEYANCE DEED IS DEBITED TO LAND PURCHASE ACCOUNT AND THE BALANCE AMOUNT IS DEBITED TO LAND DEVELOPMENT ACCOUNT. IT WAS SUBMITTED THAT THE PRICE AT WHICH THE ASSESSEE ACQUIRES LAND IS A BUSINESS DECISION ON COMMERCIAL EXPEDIENCY TO RUN THE BUSINESS. IF THE ASSESSEE STICKS TO THE BENCH MARK PRICE FIXED BY THE STATE GOVT, FOR COLLECTION OF STAMP DUTY, THE ASSESSEE CANNOT PURCHASE ANY LAND AS THE BENCH MARK PRICE IS ALWAYS LOWER THAN THE MARKET PRICE AND THAT WILL AFFECT THE RUNNING OF THE BUSINESS OF THE ASSESSEE. THE MENTION OF THE CONSIDERATION IN CONVEYANCE DEED IS FOR THE PURPOSE OF COL LECTING STAMP DUTY AND NOT THE ACTUAL CONSIDERATION OF THE TRANSACTION. REGARDING ALLEGATION THAT THE PRICE PAID OVER AND ABOVE THE REGISTRATION PRICE IS A VIOLATION OF REGISTRATION ACT, THE ASSESSEE HAS TO PAY FINE OR PENALTY FOR SUCH VIOLATION IF THE STATE GOVERNMENT INITIATES ACTION AGAINST THE ASSESSEE AND FINE OR PENALTY IS NOT DEDUCTIBLE U/S.37 OF THE ACT. HENCE, IT WAS SUBMITTED THAT THE AMOUNT PAID OVER AND ABOVE THE REGISTRATION PRICE SHOULD BE ALLOWED AS DEDUCTION U/S.37 OF THE ACT. IN SUPPO RT OF HIS CONTENTION, THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHREE PANCHAGANGASAHAKARISAKHARKARKHANA LTD., 250 ITR 772 (BOM). 53. LD D.R. ON THE OTHER HAND RELIED ON THE ORDER OF LOWER AUTHORITIES. 54. WE FIND THAT THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND OF ALLEGED VIOLATION OF SECTION 40A(3) OF THE ACT. HOWEVER, THE RELEVANT DETAILS AS TO THE DATE OF PAYMENT ON WHICH PAYMENT IN VIOLATION OF SECTION 40A(3) WAS ALL EGEDLY MADE BY THE ASSESSEE HAS NOT BEEN BROUGHT ON RECORD. IN THE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION AFRESH AFTER TAKING INTO CONS IDERATION THE APPLICABILITY OR OTHERWISE OF SECTION 40A(3) OF THE ACT. THUS, THIS GROUND OF APPEAL IS ALSO ALLOWED FOR STATISTICAL PURPOSES. AS THE FACTS IN THE PRESENT APPEAL ARE IDENTICAL, RESPECTFULLY FOLLOWING THE PRECEDENT, WE SET ASIDE THE ORDERS O F LOWER AUTHORITIES AND RESTORE THIS ISSUE BACK TO THE FILE OF AO WITH SAME DIRECTION AS GIVEN IN THE CASE OF HI - RAJDHANI SYSTEMS & ESTATES (P) LTD. 12 TECH ESTATES & PROMOTERS PVT. LTD. (SUPRA). THUS, GROUNDS NO. 2 IN ASSESSEES APPEAL FOR THE ASSESSMENT YEAR S 2004 - 05, 2005 - 06 & 2006 - 07 AND GRO UND NO. 1 OF REVENUES APPEAL FOR ASSESSMENT YEAR 2005 - 06 & 2006 - 07 ARE ALLOWED FOR STATISTICAL PURPOSES . 20 . GROUND NO.3 IN ASSESSEES APPEAL FOR THE ASSESSMENT YEARS 2004 - 05, 2005 - 06 & 2006 - 07 IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION OF R S.22,08,542/ - UNDER THE HEAD SCHEME PROMOTION EXPENSES ON PERCENTAGE BASIS FOR THE ASSESSMENT YEAR 2004 - 05 AND RS. 17 , 80 , 000 / - FOR THE ASSESSMENT YEAR 2005 - 06 AND RS. 11,26,208 / - FOR THE ASSESSMENT YEAR 2006 - 07. 21 . CONCISE FACTS RELATING TO THE ABOVE GROUN D ARE THAT T HE ASSESSEE FOR THE ASSESSMENT YEAR 2004 - 05 WAS ASKED TO PRODUCE BILLS AND VOUCHERS TOWARDS SCHEME PROMOTION EXPENSES OF RS.2,20,85,420/ - , HOWEVER, ON VERIFICATION THE AO FOUND THAT THE ASSESSEE COULD NOT PRODUCE COMPLETE BILLS TO SUBSTANTIATE THE EXPENSES AND PAYMENTS WERE MOSTLY MADE IN CASH AND DISALLOWED 10% OF THE EXPENSES I.E. RS.22,08,542/ - WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. SIMILARLY, THE AO DISALLOWED RS. RS.17,80,000/ - FOR THE ASSESSMENT YEAR 2005 - 06 AND RS.11,26,208/ - FOR THE ASSESSMENT YEAR 2006 - 07. 22 . IN APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE SCHEME PROMOTION EXPENSES FULLY WITH PROPER BILLS AND VOUCHERS. THE CIT(A) FURTHER OBSERVED THAT REASONABLE ADDITION CAN BE MADE OUT OF TH E EXPENSES THOUGH THE BOOKS OF ACCOUNTS WERE AUDITED AND NO SEIZED DOCUMENTS WERE FOUND ON SUCH EXPENSES AND CONFIRMED THE RAJDHANI SYSTEMS & ESTATES (P) LTD. 13 ADDITION MADE BY THE AO @10% OF THE TOTAL EXPENSES. FOR THE SAID REASONS , THE CIT(A) CONFIRMED THE ADDITION OF RS.17,80,000/ - FOR TH E ASSESSMENT YEAR 2005 - 06 AND RS.11,26,208/ - FOR THE ASSESSMENT YEAR 2006 - 07. 23 . LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES WHEREAS LD. DR RELIED ON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 24 . WE FIND THAT ON SIMILAR ISSUE IN A PPEAL OF ONE OF THE GROUP CASES IN CASE OF HI - TECH ESTATES & PROMOTERS PVT. LTD., IN IT(SS)A NO.03 TO 09/CTK/2017 FOR THE ASSESSMENT YEARS 2000 - 01 TO 2006 - 07, THE TRIBUNAL VIDE ITS ORDER DATED 31.08.2017, HAS RESTORED THE MATTER BACK TO THE FILE OF AO WITH THE FOLLOWING OBSERVATIONS : - 40. WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD PRODUCED BEFORE THE ASSESSING OFFICERS BILLS AND VOUCHERS RELATING TO SCHEME PROMOTION EXPENSES. THE ASSESSING OFFICER HAS MADE SWEEPING REMARKS THAT ENTIRE EXPENDI TURE IS NOT SUBJECT TO VERIFICATION WITHOUT POINTING OUT WHICH PART OF THE EXPENSES OUT OF SCHEME PROMOTION EXPENSES IS NOT VERIFIABLE AND MADE ESTIMATED DISALLOWANCE @ 10% OUT OF TOTAL EXPENSES CLAIMED AT RS.1,85,51,649/ - AND MADE ADDITION OF RS.18,55,165 / - TO THE INCOME OF THE ASSESSEE. SUCH AN ACTION OF THE ASSESSING OFFICER IS NOT TENABLE IN LAW. THE ASSESSING OFFICER IS DUTY BOUND TO POINT OUT WHICH EXPENSES ARE NOT SUPPORTED BY BILLS OR VOUCHERS ARE NOT VERIFIABLE. HE IS TO BE SPECIFIC AND CANNOT M AKE AN ESTIMATED DISALLOWANCE WHERE THE ASSESSE E HAS PRODUCED BILLS AND VOUCHERS RELATING TO THE EXPENSES BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AS WE HAVE RESTORED BACK THE ISSUE OF ADVANCE FROM CUSTOMERS AND THE ISSUE OF UNRECONCILED AD VANCE FROM CUSTOMERS TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION OF THE SAME AFRESH, WE RESTORE THIS ISSUE ALSO BACK TO THE FILE OF THE ASSESSING OFFICER TO RE - ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF OBSERVATION MADE HEREINABOVE AFTER ALL OWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. HENCE, THIS GROUND OF APPEAL IS ALSO ALLOWED FOR STATISTICAL PURPOSES. RAJDHANI SYSTEMS & ESTATES (P) LTD. 14 WE FIND THAT IN THE PRESENT APPEALS ALSO THE FACTS ARE IDENTICAL, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUN AL IN CASE OF HI - TECH ESTATES & PROMOTERS PVT. LTD., IN IT(SS)A NO.03 TO 09/CTK/2017 (SUPRA), WE RESTORE THE ISSUE BACK TO THE FILE OF AO WITH THE SAME DIRECTIONS GIVEN IN THE AFORESAID APPEALS, QUOTED ABOVE. THIS GROUND OF APPEAL OF ASSESSEE FOR ASSESSM ENT YEARS 2004 - 05, 2005 - 06 & 2006 - 07 IS ALLOWED FOR STATISTICAL PURPOSES. 25 . IN THE RESULT, ALL APPEALS OF ASSESSEE AND REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12/10 /201 7 . SD/ - (N. S. SAINI) SD/ - ( PAVAN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 12/10 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//