M/S Soumya Homes Pvt.Ltd, Bhopal V. THE DCIT-CENTRAL-II, Bhopal

ITSSA 141/IND/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6233 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-12-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 08-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: N D PATWA
• Keywords: Sale consideration of property below Jantri Value; Unexplained expenditure; Capital asset; Business income; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Principle of natural justice; Opportunity of cross examination; Retrospective amendment; Fair market value; Block assessment; Retraction; Documents seized
• Section: 271(1)(c); 43CA; 143(3); 50C; 142(1); 133A; 153A; 80IB; 133(6); 145; 132

Judgement Text

SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA (SS)NO 124 TO 129/IND/2017 & ITA(SS) NO.317/IND/2017 ASSESSMENT YEARS 2007-08 TO 2013-14 PAN : AAFCS3503C DEPUTY COMMISSIONER OF V/S M/S.SOUMYA HOMES INCOME TAX, PVT.LTD, (CENTRAL-II), BHOPAL BHOPAL (REVENUE) (RESPONDENT) ITA (SS)NO 141 TO 146/IND/2017 & ITA(SS) NO.342/IND/2017 ASSESSMENT YEARS 2007-08 TO 2013-14 PAN : AAFCS3503C M/S.SOUMYA HOMES V/S DEPUTY COMMISSIONER OF PVT.LTD, INCOME TAX, (CENTRAL-II), BHOPAL BHOPAL (APPELLANT) (RESPONDENT) REVENUE BY SMT. ASHIMA GUPTA, CIT ASSESSEE BY S/ SHRI AS HISH GOYAL & N.D. PATWA, ADVOCATES DATE OF HEARING 10.12. 2018 DATE OF PRONOUNCEMENT 24 . 01.2019 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 2 O R D E R PER BENCH. THE ABOVE CAPTIONED CROSS PPEALS FILED AT THE INSTA NCE OF REVENUE AND ASSESSEE PERTAINING TO ASSESSMENT YEAR 2007-08 TO 2 013-14 ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 (IN SHORT LD.CIT(A)], BHOPAL DATED 27 .03.2017 WHICH ARE ARISING OUT OF THE ORDER U/S 153A R.W.S 143(3) DATE D 23.05.2015 FRAMED BY DCIT(CENTRAL)-II, BHOPAL. 2. AS THE ISSUES RAISED IN THESE APPEALS ARE COMMON THESE WERE HEARD TOGETHER AND THEREFORE ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR SAKE OF CONVENIENCE AND BREVITY. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPER AND BUILDER. RETURN OF INCOME FOR ASSESSMENT YEAR S 2007-08 TO 2012-13 WERE FILED DECLARING INCOME OF RS. NIL, RS. 15,10,570/-, RS.22.48,320/-, RS.50,890/-, RS.15,87,090/,RS.1,36, 84,390/-AND RS.1,15,52,660/- FOR THE RESPECTIVE ASSESSMENT YEAR S ON 30.10.2017, 22.10.2009, 22.10.2009, 12.10.2010, 29.09,2011, 28. 09,2012 AND SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 3 30.09.2013 RESPECTIVELY. SEARCH U/S 132 OF THE ACT WERE CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE COMPANY AS WELL AS ON THE PREMISES OF OTHER CONCERN/BUSINESS ASSOCIATES FROM 29.11.12 TO 24.12.12. VARIOUS DOCUMENTS REGULAR BOOKS AND DOCUM ENTS SEIZED. NOTICE U/S 153A OF THE ACT WAS DULY SERVED. THEREA FTER, A CONSOLIDATED ASSESSMENT FOR ASSESSMENT YEAR 2007-08 TO 2013-14 WERE PASSED U/S 153A/143(3) OF THE ACT DATED 25.03. 2015; WHEREBY SUBSTANTIAL ADDITIONS WERE MADE AGAINST WHICH ASSES SEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO PARTLY CONFIRMED THE A DDITION AS MENTIONED BELOW; A.Y DATE OF FILING OF RETURN U/S 139(1) RETURNED INCOME ADDITION BY LD.A.O RELIEF BY CIT(A) (APPEAL BY DEPARTMENT.) CONFIRMED BY LD.CIT(A) APPEAL BY ASSESSEE) 2007-08 30.10.2007 NIL 80,52,620 56,92,790 23,59,83 0 2008-09 22.10.2009 15,10,570 2,35,58,430 1,47,85,46 4 87,72,966 2009-10 22.10.2009 22,48,320 3,51,22,650 2,12,36,03 8 1,38,86,612 2010-11 12.10.2010 50,890 5,19,25,412 3,67,24,541 1 ,52,00,871 2011-12 29.09.2011 15,87,090 9,86,70,007 6,46,98,23 2 3,39,71,775 2012-13 28.09.2012 1,36,84,390 15,84,19,897 5,38,01 ,894 10.46,18,003 2013-14 30.09.2013 1,14,52,660 9,68,62,329 5,92,41, 529 3,76,20,800 3. AGGRIEVED BY THE ORDER OF LD.CIT(A), NOW BOTH T HE DEPARTMENT AND THE ASSESSEE ARE IN CROSS-APPEALS BEFORE THE TR IBUNAL. 4. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER; SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 4 ASSESSMENT YEAR 2007-08 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: _ I. THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING TH E ASSESSMENT ORDER, WHICH IS BAD-IN-LAW, VOID-AB-INITIO, BARRED BY LIMI TATION, ILLEGAL, CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LIABLE TO BE ANNULLED. 2. THAT THE ADDITIONS ARE ILLEGAL AND BAD IN LAW AS THEY ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 3. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS. 23,59,830/- ON ACCOUNT OF ALLEGED SUPPRESSION OF RECEIPT. 4. THAT WITHOUT PREJUDICE, IN ANY CASE, INSTEAD OF MAKING ADDITION FOR 'GROSS PROFIT', ADDITION SHOULD HAVE BEEN MAD E FOR 'NET PROFIT' ON ALLEGED SUPPRESS ION OF RECEIPTS. 5. THAT THE LD. CIT(A) ERRED IN NOT DIRECTING THE A .O. TO CONSIDER PROVISIONS OF SECTION 234B(3) WHILE LEVYING INTEREST U/S 234B. THE APPELLANT CARVES LEAVE TO ADD, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL. ASSESSMENT YEAR 2008-09 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: _ I. THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING TH E ASSESSMENT ORDER, WHICH IS BAD-IN-LAW, VOID-AB-INITIO, BARRED BY LIMI TATION, ILLEGAL, CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LIABLE TO BE ANNULLED. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 5 2. THAT THE ADDITIONS ARE ILLEGAL AND BAD IN LAW AS THEY ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 3. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS. 76,87,966/- ON ACCOUNT OF ALLEGED SUPPRESSION OF RECEIPT. 4. THAT WITHOUT PREJUDICE, IN ANY CASE, INSTEAD OF MAKING ADDITION FOR 'GROSS PROFIT', ADDITION SHOULD HAVE BEEN MAD E FOR 'NET PROFIT' ON ALLEGED SUPPRESS ION OF RECEIPTS. 5. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION FOR ALLEGED UNDUE BENEFITS GIVEN TO DIRECTORS OF RS.10,85,000. 6. THAT THE LD. CIT(A) ERRED IN NOT DIRECTING THE A .O. TO CONSIDER PROVISIONS OF SECTION 234B(3) WHILE LEVYING INTEREST U/S 234B. THE APPELLANT CARVES LEAVE TO ADD, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL. ASSESSMENT YEAR 2009-10 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: _ I. THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING TH E ASSESSMENT ORDER, WHICH IS BAD-IN-LAW, VOID-AB-INITIO, BARRED BY LIMI TATION, ILLEGAL, CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LIABLE TO BE ANNULLED. 2. THAT THE ADDITIONS ARE ILLEGAL AND BAD IN LAW AS THEY ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 3. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS. 95,37,512/- ON ACCOUNT OF ALLEGED SUPPRESSION OF RECEIPT. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 6 4. THAT WITHOUT PREJUDICE, IN ANY CASE, INSTEAD OF MAKING ADDITION FOR 'GROSS PROFIT', ADDITION SHOULD HAVE BEEN MADE FOR 'NET PROFIT' ON ALLEGED SUPPRESS ION OF RECEIPTS. 5. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION FOR ALLEGED UNDUE BENEFITS GIVEN TO DIRECTORS OF RS.43,49,100. 6. THAT THE LD. CIT(A) ERRED IN NOT DIRECTING THE A .O. TO CONSIDER PROVISIONS OF SECTION 234B(3) WHILE LEVYING INTEREST U/S 234B. THE APPELLANT CARVES LEAVE TO ADD, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL. ASSESSMENT YEAR 2010-11 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: _ I. THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING TH E ASSESSMENT ORDER, WHICH IS BAD-IN-LAW, VOID-AB-INITIO, BARRED BY LIMI TATION, ILLEGAL, CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LIABLE TO BE ANNULLED. 2. THAT THE ADDITIONS ARE ILLEGAL AND BAD IN LAW AS THEY ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 3. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS. 1,52,00,871/- ON ACCOUNT OF ALLEGED SUPPRESSION OF RECEIPT. 4. THAT WITHOUT PREJUDICE, IN ANY CASE, INSTEAD OF MAKING ADDITION FOR 'GROSS PROFIT', ADDITION SHOULD HAVE BEEN MAD E FOR 'NET PROFIT' ON ALLEGED SUPPRESS ION OF RECEIPTS. 5. THAT THE LD. CIT(A) ERRED IN NOT DIRECTING THE A .O. TO CONSIDER PROVISIONS SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 7 OF SECTION 234B(3) WHILE LEVYING INTEREST U/S 234B. THE APPELLANT CARVES LEAVE TO ADD, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL. ASSESSMENT YEAR 2011-12 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: _ I. THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING TH E ASSESSMENT ORDER, WHICH IS BAD-IN-LAW, VOID-AB-INITIO, BARRED BY LIMI TATION, ILLEGAL, CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LIABLE TO BE ANNULLED. 2. THAT THE ADDITIONS ARE ILLEGAL AND BAD IN LAW AS THEY ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 3. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS. 2,75,25,427/- ON ACCOUNT OF ALLEGED SUPPRESSION OF RECEIPT. 4. THAT WITHOUT PREJUDICE, IN ANY CASE, INSTEAD OF MAKING ADDITION FOR 'GROSS PROFIT', ADDITION SHOULD HAVE BEEN MAD E FOR 'NET PROFIT' ON ALLEGED SUPPRESS ION OF RECEIPTS. 5. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS.5,00,000 ON ACCOUNT OF ALLEGED UNACCOUNTED TRANSACTIONS WITH FO RTUNE GROUP. 6. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS.46,86,348 ON ACCOUNT OF ALLEGED UNACCOUNTED TRANSACTIONS LPS 28 PG.39 SEIZED FROM FS- 4. 7. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS.10,00,000 ON ACCOUNT OF ALLEGED UNACCOUNTED TRANSACTIONS LPS 4/3 0 PG.3 SEIZED SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 8 FROMFS-4. 8. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS.2,60,000 ON ACCOUNT OF ALLEGED UNACCOUNTED TRANSACTIONS BALANCE SHEET-21 PG.21. 9.THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED TELESCO PIC BENEFIT BY WAY OF SET OFF OF ADDITIONS OF RS.5,00,000/-, RS.46,86,348/- R S.10,00,000/- AND RS.2,60,000/- MADE ON ACCOUNT OF ALLEGED OUT OF BOO K EXPENDITURES/ PAYMENTS WITH ADDITION OF RS.2,75,25,427/- MADE ON ACCOUNT OF ALLEGED SUPPRESSED RECEIPT. THE APPELLANT CARVES LEAVE TO ADD, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL. ASSESSMENT YEAR 2012-13 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: _ I. THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING TH E ASSESSMENT ORDER, WHICH IS BAD-IN-LAW, VOID-AB-INITIO, BARRED BY LIMI TATION, ILLEGAL, CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LIABLE TO BE ANNULLED. 2. THAT THE ADDITIONS ARE ILLEGAL AND BAD IN LAW AS THEY ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 3. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS. 2,79,63,903/- ON ACCOUNT OF ALLEGED SUPPRESSION OF RECEIPT. 4. THAT WITHOUT PREJUDICE, IN ANY CASE, INSTEAD OF MAKING ADDITION FOR 'GROSS PROFIT', ADDITION SHOULD HAVE BEEN MAD E FOR 'NET PROFIT' ON ALLEGED SUPPRESS ION OF RECEIPTS. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 9 5. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION FOR ALLEGED UNDUE BENEFITS GIVEN TO DIRECTORS OF RS.1,05,100/-.. 6. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS.7,63,49,000/- ON ACCOUNT OF ALLEGED UNACCOUNTED TRANSACTIONS WITH FORTUNE GROUP. 7.THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED TELESCO PIC BENEFIT BY WAY OF SET OFF OF ADDITIONS OF RS.7,63,49,000/- MADE ON ACCOUN T OF ALLEGED SUPPRESSED RECEIPT OF THE YEAR AND PAST YEARS. 8. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS.2,00,000 ON ACCOUNT OF ALLEGED UNACCOUNTED PAYMENT TO CRDAI. THE APPELLANT CARVES LEAVE TO ADD, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL. ASSESSMENT YEAR 2013-14 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: _ I. THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING TH E ASSESSMENT ORDER, WHICH IS BAD-IN-LAW, VOID-AB-INITIO, BARRED BY LIMI TATION, ILLEGAL, CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LIABLE TO BE ANNULLED. 2. THAT THE ADDITIONS ARE ILLEGAL AND BAD IN LAW AS THEY ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 3. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS. 3,02,27,200/- ON ACCOUNT OF ALLEGED SUPPRESSION OF RECEIPT. 4. THAT WITHOUT PREJUDICE, IN ANY CASE, INSTEAD OF MAKING ADDITION FOR 'GROSS PROFIT', ADDITION SHOULD HAVE BEEN MAD E FOR 'NET PROFIT' ON ALLEGED SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 10 SUPPRESS ION OF RECEIPTS. 5. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION FOR ALLEGED UNDUE BENEFITS GIVEN TO DIRECTORS OF RS.2,13,600/-.. 6. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS.9,00,000 ON ACCOUNT OF ALLEGED UNACCOUNTED TRANSACTIONS WITH FO RTUNE GROUP. 7. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS.59,80,000 ON ACCOUNT OF ALLEGED UNACCOUNTED TRANSACTIONS LPS 28 PG.29 SEIZED FROM FS- 4. 8. THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDIT ION OF RS.3,00,000 ON ACCOUNT OF ALLEGED UNACCOUNTED EXPENDITURE. 9.THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED TELESCO PIC BENEFIT BY WAY OF SET OFF OF ADDITIONS OF RS.9,00,000/-, RS.59,80,000/- A ND RS.3,00,000/- MADE ON ACCOUNT OF ALLEGED OUT OF BOOK EXPENDITURES/ PAY MENTS WITH ADDITION OF RS.3,02,27,200/- MADE ON ACCOUNT OF ALLEGED SUPPRES SED RECEIPT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL. 5. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER; ASSESSMENT YEAR 2007-08 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(APPEALS) ERRED IN DELETING ADDITION MADE BY THE A.O. OF RS. 45,40,259/- ON ACCOUNT OF SUPPRESSION OF RECEIPTS WITHOUT APPRECIATING THE FACTS AND EVIDENCES BROUGHT INTO LIGHT BY THE A.O. DURING ASSESSMENT PR OCEEDINGS. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 11 (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(APPEALS) ERRED IN ESTIMATING GROSS PROFIT @ 34.20% ON SUPPRE SSED RECEIPTS, IN ABSENCE OF ANY EVIDENCE OF EXPENDITURE AGAINST THE SUPPRESSED RECEIPTS. (3) THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR ALTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. ASSESSMENT YEAR 2008-09 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(APPEALS) ERRED IN DELETING ADDITION MADE BY THE A.O. OF RS. 1,47,85,466/- ON ACCOUNT OF SUPPRESSION OF RECEIPTS WITHOUT APPRECIA TING THE FACTS AND EVIDENCES BROUGHT INTO LIGHT BY THE A.O. DURING ASS ESSMENT PROCEEDINGS. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(APPEALS) ERRED IN ESTIMATING GROSS PROFIT @ 34.20% ON SUPPRE SSED RECEIPTS, IN ABSENCE OF ANY EVIDENCE OF EXPENDITURE AGAINST THE SUPPRESSED RECEIPTS. (3) THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR ALTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. ASSESSMENT YEAR 2009-10 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(APPEALS) ERRED IN DELETING ADDITION MADE BY THE A.O. OF RS. 1,83,49,951/- ON ACCOUNT OF SUPPRESSION OF RECEIPTS AND RS.26,86,091 /- ON ACCOUNT OF BOGUS DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACTS AND EVIDENCES BROUGHT INTO L IGHT BY THE A.O. DURING ASSESSMENT PROCEEDINGS. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(APPEALS) ERRED IN ESTIMATING GROSS PROFIT @ 34.20% ON SUPPRE SSED RECEIPTS, IN SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 12 ABSENCE OF ANY EVIDENCE OF EXPENDITURE AGAINST THE SUPPRESSED RECEIPTS. (3) THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR ALTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. ASSESSMENT YEAR 2010-11 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(APPEALS) ERRED IN DELETING ADDITION MADE BY THE A.O. OF RS. 2,92,46,119/- ON ACCOUNT OF SUPPRESSION OF RECEIPTS AND RS.74,48,422 /- ON ACCOUNT OF BOGUS DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACTS AND EVIDENCES BROUGHT INTO L IGHT BY THE A.O. DURING ASSESSMENT PROCEEDINGS. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(APPEALS) ERRED IN ESTIMATING GROSS PROFIT @ 34.20% ON SUPPRE SSED RECEIPTS, IN ABSENCE OF ANY EVIDENCE OF EXPENDITURE AGAINST THE SUPPRESSED RECEIPTS. (3) THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR ALTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. ASSESSMENT YEAR 2011-12 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(APPEALS) ERRED IN DELETING ADDITION MADE BY THE A.O. OF RS. 5,29,58,277/- ON ACCOUNT OF SUPPRESSION OF RECEIPTS AND RS.1,17,39,9 55/- ON ACCOUNT OF BOGUS DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACTS AND EVIDENCES BROUGHT INTO L IGHT BY THE A.O. DURING ASSESSMENT PROCEEDINGS. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(APPEALS) ERRED IN ESTIMATING GROSS PROFIT @ 34.20% ON SUPPRE SSED RECEIPTS, IN SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 13 ABSENCE OF ANY EVIDENCE OF EXPENDITURE AGAINST THE SUPPRESSED RECEIPTS. (3) THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR ALTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. ASSESSMENT YEAR 2012-13 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(APPEALS) ERRED IN DELETING ADDITION MADE BY THE A.O. OF RS. 5,38,01,894/- ON ACCOUNT OF SUPPRESSION OF RECEIPTS WITHOUT APPRECIA TING THE FACTS AND EVIDENCES BROUGHT INTO LIGHT BY THE A.O. DURING ASS ESSMENT PROCEEDINGS. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(APPEALS) ERRED IN ESTIMATING GROSS PROFIT @ 34.20% ON SUPPRE SSED RECEIPTS, IN ABSENCE OF ANY EVIDENCE OF EXPENDITURE AGAINST THE SUPPRESSED RECEIPTS. (3) THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR ALTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. ASSESSMENT YEAR 2013-14 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(APPEALS) ERRED IN DELETING ADDITION MADE BY THE A.O. OF RS. 5,81,56,427/- ON ACCOUNT OF SUPPRESSION OF RECEIPTS AND RS.10,85,100 /- ON ACCOUNT OF UN ACCOUNTED EXPENDITURE WITHOUT APPRECIATING THE FACT S AND EVIDENCES BROUGHT INTO LIGHT BY THE A.O. DURING ASSESSMENT PR OCEEDINGS. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(APPEALS) ERRED IN ESTIMATING GROSS PROFIT @ 34.20% ON SUPPRE SSED RECEIPTS, IN ABSENCE OF ANY EVIDENCE OF EXPENDITURE AGAINST THE SUPPRESSED RECEIPTS. (3) THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR ALTER THE GROUNDS OF SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 14 APPEAL ON OR BEFORE THE DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. 6. WE WILL FIRST TAKE UP ASSESSEES APPEAL AND IF COMMON ISSUES ARE ALSO RAISED IN REVENUE GROUNDS, THEN THE SAME W OULD ALSO BE ADJUDICATED ALONG WITH THE ASSESSEES GROUNDS OF AP PEAL. 7. AS REGARDS THE COMMON GROUND NO.1 RAISED BY THE ASSESSEE IN ALL THE 7 YEARS THE SAME ARE GENERAL IN NATURE THER EFORE NEEDS NO ADJUDICATION. 8. AS REGARDS COMMON GROUND NO.2 RAISED BY THE ASSE SSEE FOR ASSESSMENT YEAR 2007-08 TO 2013-14 THE GRIEVANCE OF THE ASSESSEE IS THAT THE ADDITIONS MADE IN THE IMPUGNED ASSESSMENTS ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH. 9. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SEARCH PROCEEDINGS ARE SPECIAL PROCEEDINGS FOR ASSESSING O R REASSESSING THE INCOME WHICH IS UNEARTHED DURING THE COURSE OF SEAR CH. THEREFORE, IN RESPECT OF NON-ABATED ASSESSMENTS, ADDITION SHAL L BE MADE ONLY IN RESPECT OF INCOMES, WHICH ARE RELATABLE TO ANY MATE RIAL FOUND DURING THE COURSE OF SEARCH. AT THE TIME OF SEARCH ON 29 .11.2012, FOLLOWING WERE THE YEARS, WHERE THE ASSESSMENTS WERE EITHER C OMPLETED, OR TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) HAD EX PIRED. THUS, THE CASES WOULD FALL IN THE CATEGORY OF NON-ABATED ASSESSMENTS, AND HENCE ADDITION SHOULD HAVE BEEN MADE ONLY IN RESPEC T OF EVIDENCE SHOWING UNACCOUNTED INCOME FOUND DURING THE COURSE OF SEARCH. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 15 AY DATE OF FILING OF RETURN U/S 139(1) DUE DATE FOR ISSUE OF NOTICE U/S 143(2) STATUS ON DATE OF SEARCH 2007 - 08 30.10.2007 30.09.2008 ASSESSMENT U/S 143(3) 07.12.2010 PB-81 2008 - 09 22.10.2009 30.09.20 10 ASSESSMENT U/S 143(3) 07.12.2010 P.B-111 2009 - 10 22.10.2009 30.09.20 1 0 ASSESSMENT U/S 143(3) 29.12.2011 P B 137 2010 - 11 12.10.2010 30.09.20 11 RETURN PROCESSED U/S 143(1). NO NOTICE U/S 143(2). PB 167 2011 - 12 29.09.2011 30.09.20 12 RETURN PROCESSED U/S 143(1). NO NOTICE U/S 143(2). PB 199 LD. COUNSEL RELIED FOLLOWING JUDGMENTS; CIT VS CONTINENTAL WAREHOUSING CORPORATION 58 TAXMA N 78 (BOM) OM SHAKTHY AGENCIES (MADRAS) P. LTD 157 ITD 1062 CIT VS KABUL CHAWLA 380 ITR 573 (DEL) CIT VS LATA JAIN (DEL. H.C.) 10. LD. DEPARTMENTAL COUNSEL VEHEMENTLY ARGUED AND SUPPORTED THE ORDERS OF LD. A.O. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 16 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. 12. THE GRIEVANCE OF THE ASSESSEE THROUGH THIS COMM ON GROUND NO.2 IS THAT NO INCRIMINATING MATERIAL WAS FOUND DU RING THE COURSE OF SEARCH. THE ADDITIONS SHOULD NOT HAVE BEEN MADE FOR THE ASSESSMENT YEARS WHICH STANDS ABATED ON THE DATE OF SEARCH. ASSESSEE HAS RELIED ON VARIOUS JUDGMENTS. THE COMM ON PRINCIPLE LAID THEREIN IS THAT THE ADDITIONS CAN BE MADE FOR THE ABATED ASSESSMENT YEARS IN THE BLOCK ASSESSMENT PURSUANT T O SEARCH ONLY IF THERE IS INCRIMINATING MATERIAL FOUND DURING THE CO URSE OF SEARCH. 13. WE HOWEVER OBSERVE THAT DURING THE COURSE OF SE ARCH VARIOUS DOCUMENTS WERE SEIZED/IMPOUNDED WHICH CONTAINED VAR IOUS TRANSACTIONS WHICH WERE NOT REFLECTED IN THE REGULA R BOOKS OF ACCOUNTS. IT ALSO INCLUDED LPS-6 SHOWING VARIOUS U NACCOUNTED TRANSACTIONS, LPS-28 CONTAINED THE NAMES OF THE PER SONS WITH THE AMOUNT IN WHICH SUCH AMOUNT WERE NOT REFLECTED IN T HE LEDGER ACCOUNTS OF THE PERSONS MENTIONED THEREIN, LPS 25 P AGE-7 SHOWING VARIOUS HAND WRITTEN AMOUNTS. THUS IT IS CRYSTAL C LEAR THAT SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 17 VARIOUS INCRIMINATING MATERIAL WERE FOUND DURING TH E COURSE OF SEARCH WHICH RELATED TO ALL THE SEVEN ASSESSMENT YE ARS FROM 2007-08 TO 2013-14. WE THEREFORE IN THE FACTS AND CIRCUMST ANCES OF THE CASE FOUND NO MERIT IN COMMON GROUND NO.2 RAISED BY THE ASSESSEE AND THE SAME DESERVES TO BE DISMISSED AS THERE WERE INC RIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH FOR ALL THE SEVEN ASSESSMENT YEARS AND THEREFORE THIS COMMON GROUND N O.2 DESERVES TO BE DISMISSED. 14. NOW WE TAKE UP THE COMMON ISSUE RELATING TO SUP PRESSION OF GROSS RECEIPTS FOR WHICH ASSESSEE HAS RAISED GROUND NO. 3 & 4 AND THE REVENUE HAS RAISED IN GROUND NO. 1 & 2 FOR ALL THE SEVEN ASSESSMENT YEARS. THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.23,59,830/-, RS.76,87,966/-, RS.95,37,512/-, RS. 1,52,00,871/-, RS.2,75,25,427/-, RS.2,79,63,903/- AND RS.3,02,27,2 00/- CONFIRMED BY THE LD.CIT(A) AND THE REVENUE HAS CHALLENGED THE FINDING OF LD.CIT(A) DELETING ADDITION OF RS.45,40,259/-, RS.1 ,47,85,466/-, RS.1,83,49,951/-, RS.2,92,46,199/-, RS.5,29,58,277/ -, RS.5,38,01,894/- AND RS.5,81,56,427/-. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 18 15. THE BRIEF FACTS OF THE CASE ARE THAT DURING SEA RCH PROCEEDINGS AT THE OFFICE PREMISES, TWO HANDWRITTEN DOCUMENTS AT P AGE 5 & 7 OF LPS-25 (AO PAGE.35, 36) WERE SEIZED. THESE ARE ROU GH NOTINGS AND JOTTINGS IN RESPECT OF SUMMARY OF MONTH WISE SERVIC E-TAX CALCULATION. THIS IS PREPARED BY EMPLOYEE OF ASSESSEE COMPANY WH ICH RELATES TO THE PERIOD FROM JULY 2010 TO MARCH 2011. THE TYPED VERSION OF THE LOOSE SHEETS ARE AT PB 363 PLS-25/PAGE.5 WHICH CONT AINS THE AGGREGATE OF SERVICE TAX AND TAXABLE RECEIPT (PB 36 3) ALONG WITH DETAILS OF MONTH WISE TAX PAYMENT. LPS-25/PG.7 CON TAINS PROJECT WISE RECEIPTS OUT OF WHICH SOME ARE TAXABLE FOR SER VICE TAX PURPOSES AND THE REMAINING ARE NON TAXABLE UNDER SERVICE TAX ACT. THE LD. A.O DID THE FOLLOWING:- RECEIPTS FOR 9 MONTHS (AS PER SHEET) RS. 20,40,72, 020 RECEIPTS FOR 12 MONTHS (PRO-RATA BASIS) RS. 27,20, 96,026 (PURELY ON ASSUMPTION) TOTAL TURNOVER AS PER BOOKS RS.16,42,52,458 ADVANCE FROM CUSTOMERS (NET CLOSING-OPENING) (WRONG FIGURE TAKEN BY LD.AO) RS. 1,75,29,972 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 19 RS.18,17,82,430 NET UNACCOUNTED RECEIPTS(ESTIMATED) RS.9,03,13,95 6 UNACCOUNTED RECEIPTS AS PER PERCENTAGE OF ACCOUNTED RECEIPTS 49% THE LD. A.O THEREFORE EXTRAPOLATED 49% OF THE RECEI PTS FOR ALL YEARS FROM WHAT WAS SHOWN IN ALL THE YEARS, RESULTI NG IN ADDITION OF RS.35,23,47,102/-. THE LD.CIT(A) APPLIED GROSS PRO FIT OF 34.20% ON ALLEGED UNACCOUNTED RECEIPTS OF RS.35,23,47,102/-. FOLLOWING IS THE DETAILS OF ADDITION FOR SUPPRESSED RECEIPTS BY LD. A.O AND RELIEF GIVEN BY LD. CIT(A):- SR. NO. A.Y. SALES AS PER ITR ADDITION BY LD.A.O CIT(A) CONFIRMED G.NO.3-4 OF ASSESSEE CIT(A) DELETED. GROUND NO.1-2 OF DEPARTMENT A B C D (49% OF C) E 34.20% OF D F = D - E 1 2007 - 08 1,40,81,816 69,00,089 23,59,830 45,40,259 2 2008 - 09 4,58,76,392 2,24,79,432 76,87,966 1,47,91,466 3 2009 - 10 5,69,13,191 2,78,87,463 95,37,512 1,83,49,951 4 201011 9, 07,08,144 4,44,46,990 1,52,00,871 2,92,46,119 5 2011 - 12 16,42,52,458 8,04,83,704 2,75,25,427 5,29,58,277 6 2012 - 13 16,68,68, 975 8,17,65,797 2,79,63,903 5,38,01,894 7 2013 - 14 18,03,74,750 8,83,83,627 3,02,27,200 5,81,56,427 TOTAL 71,90,75,726 35,23,47,1 06 12,05,02,709 23,18,44,397 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 20 16. NOW BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL AGAINST THE RESPECTIVE ADDITIONS DELETED A ND CONFIRMED BY LD. CIT(A) :-. 17. LD. COUNSEL FOR THE ASSESSEE MADE FOLLOWING WRI TTEN SUBMISSIONS; I. VERY BASIS OF ESTIMATION IS WRONG FOR TWO REAS ONS:- A). FIGURE OF ADVANCES IS WRONG I) LD AO HAS WRONGLY TAKEN THE FIGURE OF ADVANCES R ECEIVED FROM CUSTOMER AS RS. 1,75,29,972 (SEE PAGE 3 OF SYNOPSIS). THE FI GURE HE HAS TAKEN IS 'AMOUNT RECEIVABLE FROM CUSTOMERS' I.E. THE OUTSTAN DING AMOUNT, WHICH IS TOTALLY WRONG. OUTSTANDING AMOUNT WAS NEVER LIABLE FOR SERVICE TAX, ALTHOUGH THE SAME HAS BEEN TAKEN INTO THE SALES ACC OUNT. HE HAS TAKEN THE FIGURE OF RS. 1,75,29,972 AS UNDER: CLOSING RECEIVABLE FROM CUSTOMERS RS. 3,83,11,5 45 OPENING RECEIVABLE FROM CUSTOMERS RS.2,07,81,5 73 RS. 1,75,29,972 LD CIT(A) BRUSHED ASIDE THE FACT AND MERELY CHOSE T O APPLY PROFIT RATE, WITHOUT GIVING ANY FINDING ON SAME. II). IN FACT, THE VERY PROMINENT FACT WHICH EMERGES IS THAT THE ID AO HIMSELF ACCEPTED HIS MISTAKE IN THE ASSESSMENT ORDER FOR A. Y. 2014-15. PB 406 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 21 PARA 4 MAY KINDLY BE REFERRED. IN PARA (II) IT IS C LEARLY ACCEPTED THAT THE FIGURES ARE TAKEN WRONGLY AND IF THE CORRECTED FIGU RES ARE TAKEN, THE SUPPRESSION OF RECEIPTS AS PER THE ID AO HIMSELF CO MES TO 10.35% AND NOT 49%. IN FACT, SINCE THERE ARE NO SUPPRESSION OF RECEIPTS , THE APPELLANT IS IN APPEAL AGAINST THE ORDER OF LD AO BEFORE THE LD CIT (A). HOWEVER, THE PERTINENT FACT WHICH REMAINS IS THAT THE RESPONDENT S ITSELF HAVE ACCEPTED THE ERRONEOUS CALCULATION LEADING TO HIGH-PITCHED A DDITIONS, TO SAY THE LEAST. B). ESTIMATION AND ESTIMATION UPTO ESTIMATION . LD AO FOLLOWED A VERY UNREASONABLE APPROACH IN THE ENTIRE MATTER. HE TOOK THE FIGURES WRONGLY, AS STATED ABOVE. HE TOOK THE SALES FOR 9 MONTHS AND EXTRAPOLATED IT FOR 12 MONTHS, ASSUMING, AND ESTIMATING, THAT SALES ACROSS THE YEA R WOULD IN THE SAME RATIO. HE TOOK HIS OWN ESTIMATED FIGURE (INCORRECT AND BAS ED PURELY ON SURMISES) FOR ONE YEAR, AND EXTRAPOLATED THIS HYPOTHETICAL FI GURE WITH ACCOUNTED SALES. THE DATA OF EACH AND EVERY CUSTOMER WAS AVAILABLE P ROJECT-WISE, PARTY WISE, DATE-WISE; DULY RECORDED IN THE BOOKS OF THE ASSESSEE. NO DEFECT WAS FOUND IN THE SAID BOOKS. HE HOWEVER, ASSUMED THE UN ACCOUNTED SALES RATIO TO BE 49%. THE ESTIMATE, TO SAY THE LEAST, WA S WRONG AS PER THE ID AO HIMSELF, WHO LATER ON CORRECTED IT TO 10.35%. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 22 HE ASSUMED THE SALES TO BE UNACCOUNTED FOR ALL YEAR S ON THIS RATIO. THERE WAS NO BASIS FOR SUCH PRESUMPTION AND EXTRAPOLATION , MOREOVER IN SEARCH CASES, WHERE THE ADDITION HAS TO BE BASED ON EVIDEN CE FOUND DURING THE COURSE OF SEARCH. AND THIS ENTIRELY HYPOTHETICAL, ERRONEOUS APPROACH LEAD TO A WHOOPING ADDITION OF RS. 35 CRORES IN THE HANDS OF THE APPEL LANT. LD CIT(A) IN FACT DID NOT CONSIDER ANY OF THE SUBMISSIONS AND MERELY STATED THAT THE PROFIT ON SAME SHALL BE ESTIMATED. IT IS THEREFORE SUBMITTED THAT ON THE VERY MANNER I N WHICH ADDITION HAS BEEN MADE, THE ADDITION DESERVES TO BE DELETED, WHI CH IS TOTALLY BASED ON CONJUNCTIVES AND SURMISES, PRESUMPTIONS AND SUPPOSI TIONS AND ESTIMATION, OF ESTIMATION, WHICH ITSELF IS BASED ON ERRONEOUS FIGURES. II. HOW THE ENTIRE SALES OF THE ASSESSEE ARE ACCOU NTED A. THE RECEIPTS AS PER LPS 25 PG. 7 ARE AS UNDER: - NET EXCESS RECORDED IN BOOKS TOTAL RECEIPTS AS PER LPS (PB 363) TOTAL RECEIPTS AS PER BOOKS (CREDITS IN DEBTORS ACCOUNT) PB 364 JULY 2010 2,25,71,265 2,29,72,278 4,01,013 AUGUST 2010 1,58,44,947 1,62,44,947 4,00,000 SEPT 2010 1,57,74,545 1,64,74,545 7,00,000 OCT. 2010 2,08,35,764 2,11,29,764 2,94,000 NOV. 2010 2,23,35,065 2,24,69,104 1,34,039 DEC. 2010 2,51,31,871 2,54,59,871 3,28,000 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 23 JAN. 2011 1,86,88419 1,89,38419 2,50,000 FEB. 2011 2,92,21,290 2,9 2,21,290 - MARCH 2011 3,36,68,854 3,36,68,854 - 20,40,72,020 20,65,79,072 25,07,052 THESE RECEIPTS COMPRISE OF AMOUNTS RECEIVED FROM CU STOMERS. SERVICE-TAX AT THAT TIME (PRIOR TO INTRODUCTION OF POINT OF TAX ATION RULES, 2011) WAS PAYABLE ON RECEIPT BASIS. THE AMOUNT RECEIVED FROM CUSTOMERS IS CONSIDERED AS RECEIPT FOR SERVICE-TAX PURPOSES. THI S AMOUNT RECEIVED FROM CUSTOMER IS EITHER ADVANCE OR BOOKED AS SALES LATER ON. B. THE LOOSE PAPER LPS 25 PG. 7 IS A ROUGH SUMMARY OF THE RECEIPTS, FOR CALCULATION OF THE SERVICE-TAX. THESE RECEIPTS WOUL D HAVE BEEN TAKEN BEFORE FINALISATION OF ACCOUNTS. WHEN THE ACCOUNTS WOULD H AVE BEEN FINALISED, AND BANK STATEMENTS WOULD HAVE BEEN RECONCILED, FUR THER RECEIPTS OF RS. 25 LAKHS WOULD HAVE BEEN THERE, WHICH WERE LATER AC COUNTED FOR AND ARE A PART OF THE BOOKS, BUT NOT TAKEN WHILE DOING ROUGH CALCULATION. THUS THERE IS A NET DIFFERENCE OF RS. 25 LAKHS (APP ROX). THE NET AMOUNT RECORDED IN THE BOOKS IS IN EXCESS OF THE LOOSE PAP ER. THERE CANNOT BE ANY SUPPRESSION OF RECEIPTS. C. THE SUNDRY DEBTORS LEDGER AT PB 364 TALLIES WITH THE BOOKS OF ACCOUNTS. THE OPENING BALANCE IS RS. 4,06,95,248; WHICH IS AS UNDER: ADVANCES FROM CUSTOMERS (PB 378) RS.6,14,76,821 LESS: RECEIVABLE FROM CUSTOMERS (PB 377) ( RS. 2,07,81,573 ) RS. 4,06,95,248 THE CLOSING BALANCE IS RS. 10,54,79,568, WHICH IS A S UNDER: SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 24 ADVANCES FROM CUSTOMERS (PB 378) RS. 14,37,91, 113 LESS: RECEIVABLE FROM CUSTOMERS (PB 377) RS. 3,8 3,11,545) RS.10,54,79,568 THE ENTIRE AMOUNT WAS DULY RECORDED IN THE BOOKS AN D TALLIES WITH THE BOOKS. THERE WERE NO UNRECORDED SALES. D. LIST OF PARTY-WISE/ FLAT-WISE WORKING OF OPENING AMOUNT RECEIVABLE; SALES RECORDED DURING THE YEAR; REFUNDED/ ADJUSTED; AMOUN T RECEIVED DURING THE YEAR; AND CLOSING BALANCE IS GIVEN. PB 365-375. THE FIGURES ARE SAME AS IN THE AUDITED ACCOUNTS. LIKE TOTAL OF SALES FOR THE YEAR (PB 375) RS. 16,40 ,82,458 TALLIES WITH AUDITED ACCOUNTS PB 195. TOTAL OF CLOSING BALANCE RS. 10,54,79,568 (PB 375) TALLIES WITH NET OF ADVANCES, AS ABOVE. TOTAL OF OPENING BALANCE RS.4,06,96,248 (PB 375) TA LLIES WITH NET OF ADVANCES, AS ABOVE. E. IN LPS PG. 25 PAGE 7, THE TAXABLE RECEIPTS ARE M ENTIONED. THE SAME FIGURE IS SHOWN AS TAXABLE IN LPS 25 PAGE 5. SERVIC E-TAX PAID ON THE TAXABLE RECEIPTS IS NOTED. THIS FIGURE TALLIES WITH SERVICE-TAX RETURNS. THE ONLY DIFFERENCE IS THAT THE RECEIPTS NOTED ON IPS 2 5 PARA 5 IS INCLUSIVE OF SERVICE-TAX @ 2.57%. WHEREAS, IN THE SERVICE TAX RE TURNS THE RECEIPTS ARE RECORDED EXCLUSIVE OF SERVICE-TAX (AS PER THE REQUI REMENT IN THE SERVICE- TAX) PS 380, 390 TALLIES WITH PS 363. F. THERE IS NO OUT OF BOOKS RECEIPTS, COPIES OF THE AUDITED FINAL ACCOUNTS FOR THE A.Y. 2007-08 TO 2013-14 ARE ON RECORD, THE TOTA L RECEIPTS AS PER SEIZED SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 25 DOCUMENTS MATCHES WITH THE TOTAL RECEIPT FROM CUSTO MER. THUS, IT IS PRAYED THAT NO ADDITION IS CALLED FOR. 3. WITHOUT PREJUDICE, IN ANY CASE, N.P. RATE SHALL BE TAKEN ON UNACCOUNTED SALES, IF ANY. THE ADDITION IF EVER SHOULD BE MADE ON THE NET PROF IT RATIO BASIS, ON BASIS OF M.P HIGH COURT JUDGEMENT IN CASE OF BALCHAND AJI TKUMAR 263 ITR 610.(PS 411-413) FOLLOWED BY HON'BLE ITAT, INDORE I N EAGLE SEEDS & BIOTECH LTD 102 TT} 1065.(PS 414-425). ALSO, MANMOH AN SADANI 3041TR 52 (MP). THE NET PROFIT RATIO FROM F.Y. 2006-07 TO 2012'-13 RANGES BETWEEN 5.89% TO 8.68%. NET PROFIT CHART F.Y. 2006-07 2007-08 2008-09 2009-10 2010-11 2011-1 2 2012-13 TOTAL TURNOVER 1,40,81,816 4,58,76,392 5,69,13,191 9,07,08,144 16, 40,82,458 16,68,975 18,03,74,750 71,89,05,726 NET PROFIT 8,29,319 55,96,473 49,40,604 75,88,456 1,34,67,663 1,38,56,696 1,46,33,629 6,09,12,841 % OF NET PROFIT 5.89 12.20 8.68 3.37 8.21 8.30 8.11 8.47 18. ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATI VE REFERRED TO THE FOLLOWING FINDINGS OF LD. ASSESSING OFFICER; 11.8 THE CLAIM OF THE ASSESSEE COMPANY HAS BEEN CO NSIDERED BY THE SAME IS NOT ACCEPTABLE DUE TO FOLLOWING REASONS; A. THE ASSESSEE COMPANY ITSELF HAS ACCEPTED THAT WH ATEVER IS WRITTEN ON THIS PAPER MENTIONED ABOVE IS CORRECT. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 26 B. COLUMN NO.5 OF PAGE NO.7 OF LPS-25 SEIZED FROM F S-4, IS TOTAL RECEIPT FOR A.Y. 2011-12. OUT OF WHICH TAXABLE REC EIPTS ARE MENTIONED IN COLUMN NO.6 AND NON TAXABLE RECEIPTS ARE MENTIONED IN COLUMN NO.7 OF THIS PAGE. IT MEANS TOTAL RECEIPTS FROM JULY 2010 TO MARCH 2011, IS RS. 20,40,72,0191- OUT OF WHICH RS. 13,12,52,2601- IS T AXABLE RECEIPT AND RS. 7,28,19,759/- IS NON TAXABLE RECEIPT. IT IS TO BE N OTED THAT THE ASSESSEE HIMSELF HAS ACCEPTED THIS FACT. C. FURTHER THE ASSESSEE HAS CLAIMED THAT ALL THESE RECEIPTS HAVE BEEN DULY REFLECTED IN THE BOOKS OF ACCOUNT AND THERE IS NO RECEIPT WHICH HAS BEEN RECEIVED OUT OF BOOKS. TO VERIFY THIS, TOTAL R ECEIPTS AS PER BOOKS ARE TO BE SEEN WHICH ARE AS UNDER A.Y. SALES ADVANCE RECEIVED FROM CUSTOMERS ADVANCE RECEIVED FROM CUSTOMERS IN THE CURRENT YEAR 2 010 - 11 9,07,08,144/ - 2,07,81,573/ - --- 2011 - 12 16,42,52,458/ - 3,83,11,545/ - 1,75,29,972/ - D. ON PERUSAL OF THE ABOVE TABLE, IT IS CLEAR THAT THE ASSESSEE COMPANY HAS NOT DECLARED TOTAL RECEIPTS IN ITS ITR. TOTAL R ECEIPTS AS DECLARED BY THE ASSESSEE DURING A.Y. 2011-12 IS RS. 18,17,82,430/- (RS. 16,42,52,458/- + 1,75,29,9721- ) ONLY WHILE THE ASSESSEE HIMSELF HAS ACCEPTED THAT HE HAS RECEIVED AN AMOUNT OF RS. 20,40,72,0191- FROM JULY 2010 TO MARCH 2011. E. IF MATHEMATICAL FORMULA IS APPLIED THEN THE ASS ESSEE COMPANY HAS RECEIVED AN AMOUNT OF RS. 2,26,74,6681- PER MONTH D URING A.Y. 2011-12, RE SUITING TOTAL AMOUNT OF RS. 27,20,96,016/- DURIN G A.Y. 2011-12. AS TOTAL RECEIPTS OF THE ASSESSEE COMPANY IS RS. 27,20 ,96,016/- AND THE ASSESSEE HAS DECLARED ONLY AN AMOUNT OF RS. 18,17,8 2,430/- ONLY HENCE THERE IS NO DOUBT THAT THE ASSESSEE HAS SUPPRESSED ITS RECEIPTS BY AT LEAST 49%. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 27 11.9 IN THE LIGHT OF ABOVE FACTS AND DISCUSSION, IT IS HELD THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY ARE NOT CORRECT AN D THE SAME ARE REJECTED U/S 145(3) OF IT ACT. THE ASSESSEE COMPANY HAS SUPPRESSED ITS RECEIPTS BY 49% AND THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNDER. SINCE THE ASSESSEE HAS ALREADY CLAIMED EX PENSES AGAINST THE DISCLOSED RECEIPTS, NO EXPENSES SHALL BE ALLOWABLE AGAINST THESE UNDISCLOSED RECEIPTS. A.Y. TOTAL SALES AS PER ITR. SUPPRESSION OF RECEIPTS @ 49% 2007 - 08 1,40,81,816/ - 69,00,089/ - 2008 - 09 4,58,76,392/ -- 2,24,79,432/ - 2009 - 10 5,69,13,191/ - I 2,78,87,463/ - 2010 - 11 9,07,08,144/ - 4,44,46,990/ - 2011 - 12 16,42,52,458/ - 8,04,83,704/ - 2012 - 13 16,68,68,975/ - 8,17,65,797/ -- 2013 - 14 18,03,74,750/ - ' 8,83,83,627/ - 19. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE COMMON ISSUE BEFORE US RELATES TO T HE SUPPRESSION OF RECEIPTS AND ESTIMATION OF GROSS PROFIT/NET PROFIT BY BOTH THE LOWER AUTHORITIES. LD. A.O ON THE BASIS OF DOCUMENT PLAC ED AT PAGE-7 OF LPS-25 TOOK A VIEW THAT THE ASSESSEE IS SHOWING THE RECEIPTS UNDER TWO HEADS NAMELY TAXABLE AND NON TAXABLE AND THEREA FTER HE FOUND SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 28 SOME MISMATCH WITH THE REGULAR BOOKS OF ACCOUNTS AN D HE ACCORDINGLY RECALCULATED THE GROSS RECEIPTS OF THE ASSESSEE AND MADE CALCULATION FOR RESPECTIVE ASSESSMENT YEARS CALCULA TING @49% OF THE TURNOVER, WHICH WAS THEREAFTER SCALED DOWN BY LD.CI T(A) TO GROSS PROFIT @34.20% OF TURNOVER OBSERVING AS FOLLOWS; THE ASSESSING OFFICER HAS SPECIFICALLY MENTIONED I N PARA 2 OF THE ASSESSMENT ORDER THAT VARIOUS BOOKS OF ACCOUNTS, DO CUMENTS WERE SEIZED. REGULAR BOOKS WERE PRODUCED AND CHECKED WITH THE SE IZED DOCUMENTS. SEIZED DOCUMENTS WITH SPECIAL REFERENCE TO PAGE NUM BERS 5 OF LPS-25 AND PAGE NUMBERS 7OF LPS-25 CLEARLY SHOWS THAT THE DET AILS OF TOTAL RECEIPTS ARE NOT PROPERLY REFLECTED IN THE BOOKS OF ACCOUNTS AND DO NOT MATCH. THE SEIZED DOCUMENTS AND PAPERS ARE THE INCRIMINATING M ATERIAL ON THE BASIS OF WHICH THE ADDITIONS HAVE BEEN MADE. THE AO IS NOT BOUND BY THE DECLARED PROFITS - THE ITO, EVEN WHEN HE ACCEPTS ASSESSEE'S THE METHOD OF ACCOUNTING IS NOT BOUND BY THE FIGURE OF PROFITS SHOWN IN THE ACCOUNTS' CIT VS MCMILLAN & CO. (1958) 33 ITR 182 (SC). IN SHYAM BIDI WORKS VS COMMISSIONER OF INCOME TAX ( 2014) 89 CCH 179 AILHC A.O REJECTED ASSESSEES BOOKS OF ACCOUNT U/S 152(2) AND NOTICED THAT GROSS PROFIT RATE SHOWN FOR THE YEAR IN QUESTION IS AT 9. 46% WHICH WAS LESS AS COMPARED TO PREVIOUS YEARS THE HIGH COURT HELD 'ONC E BOOKS OF ACCOUNTS SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 29 ARE REJECTED, TURNOVER HAS TO BE ESTIMATED AND, WHI LE ESTIMATING TURNOVER, PAST RECORD OF ASSESSEE, HIS METHOD OF ACCOUNTING A ND HIS GENERAL REPUTATION IN MARKET BECOMES RELEVANT . WHILE REJEC TING BOOKS OF ACCOUNTS. A.O ASSESSED TURNOVER BASED ON THE GROSS PROFIT RAT ES INDICATED BY ASSESSE IN HIS PREVIOUS ASSESSMENT YEARS. IT IS NOT ONLY TH E RIGHT BUT DUTY OF THE ASSESSING OFFICER TO CONSIDER WHETHER OR NOT THE BO OKS DISCLOSE THE TRUE STATE OF ACCOUNTS AND THE CORRECT INCOME CAN BE DED UCTED THERE FROM. IT IS INCORRECT TO SAY THAT THE OFFICER IS BOUND TO ACCEP T THE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE THE C ORRECTNESS OF WHICH HAD NOT BEEN QUESTIONED IN THE PAST. SECTION 145 CO NFERS SUFFICIENT PART UPON THE OFFICER - IT IMPOSES THE DUTY UPON HIM- TO MAKE SUCH COMPUTATION IN SUCH MANNER AS HE DETERMINE FOR DEDU CING THE CORRECT PROFITS. 5.2 IN PARA 11.8 AND 11.9 THE A.O HAS GIVEN A CLEAR -CUT FINDING REGARDING THAT THE CORRECTLY THE BOOKS OF ACCOUNT HAVE BEEN R EJECTED U/S 145(3) OF THE LT ACT AS THEY ARE NOT FOUND TO BE RELIABLE. THE ESTIMATE HAS BEEN MADE BY THE A.O ON ACCOUNT OF SUPPRESSED RECEIPTS AT THE RATE OF 49% OF GROSS RECEIPT FOR ALL THE YEA RS UNDER CONSIDERATION. THE APPELLANT HAS STATED THAT IF THE ESTIMATE HAS T O MADE THEN THE PROFIT ON THE ESTIMATED MAY BE TAXED AND NOT THE ENTIRE RE CEIPTS. 5.3 THE PLEA TAKEN BY THE APPELLANT THAT ENTIRE REC EIPTS CANNOT BE PROFIT AND ONLY THE PROFIT OUT OF THE RECEIPTS SHOULD BE T AXED IS REASONABLE. THE APPELLANT HAS SHOWN GROSS PROFIT AS BELOW IN A.Y.S 2007-08 TO 2013-14, THE GROSS PROFIT SHOWN BY THE APPELLANT ASSESSEE RA NGES FROM 17.30 TO 34.19% :- SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 30 A.Y GROSS RE CEIPTS AS PER P&L A/C GROSS PROFIT SHOWN BY ASSESSEE IN P&L A/C % OF GROSS PROFIT AS SHOWN BY THE ASSESSEE 2007 - 08 14081816 4215610.43 29.93% 2008 - 09 45876392 12127675.52 26.43% 2009 - 10 56913191 12410323.29 21.80% 2010 - 11 90708144 193370496.10 21.35% 2011 - 12 164252458 28400613.58 17.30% 2012 - 13 166868975 52266663.97 31.32% 2013 - 14 180374750 61673634.49 34.19% 5.4 THE GROSS PROFIT OF 34.20% IS CONSIDERED REASON ABLE KEEPING IN VIEW THE GROSS PROFIT DECLARED BY THE APPELLANT ASSESSEE IN THE PAST YEARS. IN VIEW OF THE ABOVE, THE ADDITION ON ACCOUNT OF SUPPR ESSED RECEIPTS IS WORKED AS UNDER APPLYING A GROSS PROFIT RATE OF 34. 20% ON THE ENHANCED TURNOVER ON ACCOUNT OF SUPPRESSED RECEIPTS WHICH IS 49% OF THE TOTAL TURNOVER AS DECLARED BY THE APPELLANT ASSESSEE IN A YS 2007-08 TO 2013- 14. ASSESSMENT YEAR SUPPRESSION OF RECEIPTS ADDED BY THE A.O @ 49% OF THE TURNOVER. GROSS PROFIT @ 34.20% OF ENHANCED TURNOVER 2007 - 08 RS.69,00,089/ - RS.23,59,803/ - 2008 - 09 RS.2,24,79,432/ - RS.76,87,966/ - 2009 - 10 RS.2,78,87,4 63/ - RS.95,37,512/ - 2010 - 11 RS.4,44,46,990/ - RS.1,52,00,871/ - 2011 - 12 RS.8,04,83,704/ - RS.2,75,25,427/ - 2012 - 13 RS.8,17,65,797/ - RS.2,79,63,903/ - 2013 - 14 RS.8,83,83,627/ - RS.3,02,27,200/ - SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 31 IN VIEW OF THE FOREGOING DISCUSSION THE GROSS PROFI T RATE OF 34 20% ON THE ENHANCED TURNOVER WHICH IS 49% OF THE TOTAL TURNOVE R IN EACH ASSESSMENT YEAR IS CONFIRMED. THE A.O IS DIRECTED TO WORK OUT GROSS PROFIT AT THE RATE OF 34.20% ON THE ENHANCED TURN OVER IN EACH A.YS 2007-08 TO 2013-14 AND GIVE APPROPRIATE RELIEF. THE GROUNDS OF APPEAL FOR A Y S 2007 -08 TO 2013-14 ARE PARTLY ALLOWED. 20. FROM PERUSAL OF THE FINDING OF LOWER AUTHORITIE S, THE COMMON FACTS WHICH EMERGES IS THAT THE ISSUE OF SUPPRESSIO N OF RECEIPTS IGNITED FROM THE SEIZED DOCUMENT IN PAGE-7 OF LPS-2 5 WHICH RESULTED INTO EXTRAPOLATION OF GROSS RECEIPTS AND CALCULATI ON OF PROFITS THEREON. IT IS NOT DISPUTED THAT APART FROM THE SE IZED DOCUMENT AT LPS-25 WHICH WAS IN THE FORM OF HAND WRITTEN ACCOUN T OF RECEIPT FOR VARIOUS PROJECTS LIKE ESTATE, PARK AND PRIVILEGE FO R THE MONTH OF MARCH 10, 2011 THERE WAS NO OTHER DOCUMENT FOUND DU RING THE COURSE OF SEARCH WHICH COULD PROVE THAT THE ASSESSE E HAS SUPPRESSED THE RECEIPTS WHICH HAVE NOT BEEN DISCLOSED IN THE REGULAR BOOKS OF ACCOUNTS. THE MAIN IMPETUS IS ON PAGE-7 OF LPS-25 AND IT NEEDS TO BE EXAMINED AS TO WHETHER PAGE-7 OF LPS-25 SEIZED F ROM THE ASSESSEES PREMISES COULD BE TAKEN AS A SOUND BASIS OF COMPUTING SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 32 SUPPRESSED RECEIPTS. 21. COLUMN NO.5 OF PAGE 7 OF LPS 25 OF THE SEIZED D OCUMENT FROM FS-4 SHOWS THE TOTAL RECEIPT FOR ASSESSMENT YEAR 20 11-12 OUT OF WHICH TAXABLE RECEIPTS ARE MENTIONED IN COLUMN NO.6 AND NON TAXABLE RECEIPTS ARE MENTIONED IN COLUMN NO.7. IT SHOWS THAT FROM JULY 2010 TO MARCH 2011 TOTAL RECEIPT ARE OF RS.20 ,40,72,019/- HAS BEEN RECEIVED OUT OF WHICH TAXABLE RECEIPT IS RS.13 ,12,52,260/- AND NON TAXABLE RECEIPT IF RS.7,28,19,759/-. TAXABLE S UM MENTIONED AT COLUMN 7 IS CORROBORATED TO CALCULATION OF TAX ON M ONTHLY BASIS @ 2.75%. TAXABLE RECEIPT OF OCTOBER, 2010 IS DENOTED AS RS.1,25,57,491/-. AND THE SAME FIGURE IS MENTIONED ON PAGE 5 OF LPS-25 AS BEING THE AGGREGATE OF SERVICE TAX OF RS. 3,15,238/- AND THE TAXABLE RECEIPT OF RS.1,22,42,253/-. 22. WE ALSO FIND THAT THE SERVICE TAX PAID FIGURE O F RS.3,39,341/- IS REFLECTED IN THE TALLY ACCOUNTS. THE SERVICE TAX IS RECEIVED FROM THE CUSTOMERS ON THE TAXABLE AMOUNT AND NON TAXABLE SUM S APPEARING AT PAGE-7 OF LPS-25 REFERS TO THE RECEIPTS FROM THE CUSTOMERS WHICH IS NOT TAXABLE UNDER SERVICE TAX AS IT RELATES TO B UILDING MATERIAL. COPIES OF THE RELEVANT EXTRACT OF BOOKS OF ACCOUNTS WERE ALSO PLACED SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 33 BEFORE US WHEREIN FROM JULY, 2010 TO MARCH, 2011, T HE TOTAL RECEIPT FROM CUSTOMERS ARE SHOWN AT RS.206329022/- WHICH AL MOST TALLIES TO THE TOTAL RECEIPT OF RS. 20,40,72,019/- SHOWN I N PAGE-7 OF LPS-25. 23. IT IS ALSO INTERESTING TO NOTE THAT THE REGULAR BOOKS OF ACCOUNTS WERE PRODUCED AND CHECKED BY THE LD.A.O WITH THE SE IZED DOCUMENTS AND THE LD.A.O HAS NOT GIVEN ANY FINDING ABOUT ANY DEFECT IN THE AUDITED BOOKS OF ACCOUNTS. ONE MORE FACT WHICH SUP PORTS THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS AS A DEVELOPER OF AFFORDABLE AND LOW HOUSI NG PROJECTS. COMPLETE DETAILS OF VARIOUS CONSTRUCTION PROJECTS U NDERTAKEN IN LAST SEVEN YEARS WERE FILED. THE PERCENTAGE OF RECEIPT FROM SUCH HOUSING PROJECTS WHICH ARE MEANT FOR THE LOWER AND MIDDLE G ROUP WORK OUT AT 90% OF TOTAL RECEIPTS. THE CUSTOMER IN THIS SECTOR ALWAYS RELIES ON BANK FINANCE FOR THEIR FINANCIAL REQUIREMENTS AND IT IS CONTENDED THAT THERE IS LITTLE SCOPE FOR OUT OF BOOK RECEIPTS IN SUCH AFFORDABLE HOUSING PROJECT. 24. IT SEEMS THAT LD. A.O WHILE EXTRAPOLATING FIGUR E OF GROSS RECEIPTS HAS NOT TAKEN THE WORD TAXABLE AND NOT TAXABLE APPE ARING AT PAGE-17 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 34 OF LPS-25 IN RIGHT PERSPECTIVE. THE WORD TAXABLE A ND NON TAXABLE RECEIPTS IN THIS SHEET REFERS TO THE TAXABLE SERVIC ES AND NON TAXABLE SERVICES WHEREAS THE LD. A.O HAS PRESUMED THAT THE TAXABLE AMOUNT REFERS TO THE GROSS RECEIPT WHICH THE ASSESSEE IS G OING TO OFFER AS REVENUE IN ITS REGULAR BOOKS OF ACCOUNTS AND HE PRE SUMED AS NON TAXABLE SUPPRESSED RECEIPTS. IT IS FURTHER OBSERVE D THAT THE LD. A.O HAS TREATED AN AMOUNT OF RS.2,01,81,573/- AND RS.3, 83,11,545/- AS ADVANCE RECEIPT FROM CUSTOMERS FOR ASSESSMENT YEAR 2010-11 AND 2011-12 RESPECTIVELY, BUT ACTUALLY THESE TWO FIGURE S ARE SUNDRY DEBTORS AS ON 31.3.2010 AND 31.3.2011. THIS MISTAK E COMMITTED BY LD. A.O SEEMS TO HAVE RESULTED INACCURATE WORKING O F GROSS RECEIPTS OF RS.18,17,82,430/-. BASED ON THESE INCORRECT FIGU RES THE LD. A.O APPLIED THE MATHEMATICAL FORMULA TO WORK OUT THE AL LEGED SUPPRESSED RECEIPTS @49% OF THE TOTAL SALES OF THE ASSESSEE AS SHOWN IN THE INCOME TAX RETURN. MERELY ON THE BASIS OF THIS INC ORRECT FINDING TAKING INCORRECT FIGURES AND WRONGLY INTERPRETING T HE WORD TAXABLE AND NON TAXABLE RECEIPTS AS THE ONE RELATED TO DISC LOSED RECEIPTS IN THE REGULAR BOOKS AND SUPPRESSED RECEIPTS OUT OF BO OKS, PAVED THE WAY FOR THE INCORRECT AND DEFECTIVE WORKING BY LD.A .O RESULTING INTO SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 35 THE ADDITION FOR ALL THE SEVEN YEARS AND ALSO FOR I NVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT FOR REJECTI NG THE BOOKS OF ACCOUNTS. 25. IT IS A SETTLED PRINCIPLE OF LAW THAT IF NO INC RIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH FOR A PARTICULAR YEAR AND NO EVIDENCE IS AVAILABLE WITH THE REVENUE AUTHORITIES OF UNDISCLOSED SALES THEN THE LD. A.O IS NOT JUSTIFIED TO MAKE HYP OTHETICAL ADDITIONS FOR THE OTHER YEARS OF THE BLOCK PERIOD. AFTER EXAM INING THE FACTS OF THE ASSESSEE FOR ALL THE YEARS WE HAVE NO DOUBT TO EXPRESS THAT THE ADDITIONS MADE FOR THE SUPPRESSED RECEIPTS @49% OF THE TURNOVER BY THE LD. A.O WAS MERELY BASED ON SURMISES, CONJUNCTU RES, PRESUMPTIONS AND SUPPOSITIONS AND ESTIMATION OF EST IMATION WHICH ITSELF BASED ON ERRONEOUS FIGURES. 26. IT IS AN UNDOUBTED FACT THAT THE TOTAL ADDITION FOR SUPPRESSION OF RECEIPTS HAS BEEN MADE BY THE LD. A.O ONLY ON THE B ASIS OF PAGE 5 & 7 OF LPS-25 SEIZED DURING THE COURSE OF SEARCH. IN THIS PIECE OF DOCUMENT THE INFORMATION RELATING TO RECEIPTS FOR T HE PERIOD JULY 2010 TO MARCH 2011 RECEIVED FROM VARIOUS PROJECTS R UN BY THE SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 36 ASSESSEE WERE MENTIONED. DETAILS ARE ALSO MENTIO NED ABOUT THE BIFURCATION OF RECEIPTS INTO TWO CATEGORIES I.E. TA XABLE AND NON TAXABLE. AS REGARDS TOTAL TAXABLE RECEIPTS IS CONC ERNED WHICH AMOUNTED TO RS.13,12,52,260/- LD. A.O WAS SATISFIED THAT THE SAME IS CORROBORATED BY THE CALCULATION OF SERVICE TAX ON MONTH SUM @2.57% AND HE HAS ALSO OBSERVED THAT THE SERVICE TA X PAID FIGURE OF RS.3,33,39,341/- FOR OCTOBER, 2010ISDULY REFLECTED IN THE BOOKS OF ACCOUNTS MAINTAINED IN TALLY SOFTWARE AND HE ALSO CONFIRMED THAT ALL THE ENTRIES IN PAGE 5 & 7 RELATING TO TAXABLE AMOUN T AND SERVICE TAX PAID THEREON ARE DULY COLLABORATED WITH THE SERVICE TAX RETURN. AS REGARDS THE ADDITION OF NON TAXABLE AMOUNT WHICH BA SICALLY WAS MEANT FOR THE SERVICE TAX CALCULATION BECAUSE UNDER THE SERVICE TAX RULES APPLICABLE FOR THE YEAR UNDER APPEAL, GROSS R ECEIPTS WERE TO BE SEGREGATED INTO TWO PARTS OF WHICH ONE IS THE TAXAB LE SERVICE FOR THE SERVICES PROVIDED BY THE COMPANY AND OTHER PARTS R ELATING TO NON TAXABLE RECEIPT WHICH ARE MAINLY ON ACCOUNT OF BUI LDING MATERIAL AND OTHER GOODS USED IN THE CONSTRUCTION PROCESS WHICH ARE NOT TAXABLE UNDER SERVICE TAX ACT. THUS THE ENTIRE RECEIPTS OF THE COMPANY ARE NOT LIABLE FOR SERVICE TAX . IN THE WORKING SHEET I.E. PAGE-7 OF LPS-25 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 37 GROSS RECEIPTS FROM PROJECTS, TAXABLE RECEIPTS AND NON TAXABLE RECEIPTS HAVE BEEN SHOWN 5 TH COLUMN TOTAL RECEIPTS, 6 TH COLUMN TAXABLE RECEIPTS AND 7 TH COLUMN IS RESULTANT NON TAXABLE RECEIPTS. DURING JULY,2010-MARCH, 2011 TOTAL RECEIPTS OF RS.2 0,40,72,019/- ARE MENTIONED WHICH ALMOST TALLIES TO THE GROSS REC EIPTS OF 20,65,79,072/-SHOWN BY THE ASSESSEE IN THE CONSOLID ATED SHEET OF SUNDRY DEBTORS FOR THE FINANCIAL YEAR 2010-11 PLACE D AT PAGE 364 OF THE PAPER BOOK WHICH BRINGS US TO THE CONCLUSION TH AT THE OBSERVATION OF THE LD. A.O THAT 35% RECEIPTS ARE OU T OF BOOKS AND CONSTITUTE ON-MONEY IS DEVOID OF MERITS WHICH IS BORNE OUT FROM THE FACTS THAT THE ENTIRE RECEIPTS HAVE BEEN CREDITED IN THE BOOKS. WE FURTHER FIND THAT LD. A.O COMPUTED THE UNACCOUNTED RECEIPTS AS 49% OF THE ACCOUNTED RECEIPTS IN THE FOLLOWING MANNER; RECEIPTS FOR 9 MONTHS (AS PER SHEET) RS. 20,40,72, 020 RECEIPTS FOR 12 MONTHS (PRO-RATA BASIS) RS. 27,20, 96,026 (PURELY ON ASSUMPTION) TOTAL TURNOVER AS PER BOOKS RS.16,42,52,458 ADVANCE FROM CUSTOMERS (NET CLOSING-OPENING) SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 38 (WRONG FIGURE TAKEN BY LD.AO) RS. 1,75,29,972 RS.18,17,82,430 NET UNACCOUNTED RECEIPTS(ESTIMATED) RS.9,03,13,95 6 UNACCOUNTED RECEIPTS AS PER PERCENTAGE OF ACCOUNTED RECEIPTS 49% 27. THE LD. A.O THEREAFTER EXTRAPOLATED 49% OF THE RECEIPTS FOR ALL THE YEARS WHICH RESULTED INTO ADDITION OF RS.35,23, 47,102/- SPREAD OVER TO SEVEN ASSESSMENT YEARS IN QUESTION. NOW IN THE ABOVE GIVEN DETAILS WHICH FORMS THE BASIS OF THE IMPUGNED ADDI TION LD. A.O TOOK A FIGURE OF ADVANCES FROM CUSTOMERS (NET (-) OPENIN G) AT RS.1,75,29,972/- AS A PART OF RECEIPTS NOT OFFERED TO TAX BUT THE FACT IS THIS PARTICULAR AMOUNT WAS NEVER LIABLE FOR SERV ICE TAX THOUGH IT WAS PART OF GROSS RECEIPTS. EVEN LD.CIT(A) WAS NO T ABLE TO POINT OUT IN HIS FINDINGS THAT THE BASIS TAKEN BY LD.A.O FOR EXTRAPOLATING OF DIFFERENCE WAS NOT CORRECT. 28. WE FIND THAT EVEN WHEN THE TOTAL RECEIPTS SHOW N AS PER LPS-25, PAGE-7 PLACED ON PAPER BOOK AT PAGE-363 ARE COMPARE D WITH THE TOTAL RECEIPTS AS PER BOOKS WHICH WERE CREDITED IN THE SU NDRY DEBTORS SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 39 ACCOUNT, WE FIND THAT THE DIFFERENCE IS ONLY OF RS. 25,07,052/- WHICH IS ARRIVED IN THE FOLLOWING MANNER; NET EXCESS RECORDED IN BOOKS TOTAL REC EIPTS AS PER LPS (PB 363) TOTAL RECEIPTS AS PER BOOKS (CREDITS IN DEBTORS ACCOUNT) PB 364 JULY 2010 2,25,71,265 2,29,72,278 4,01,013 AUGUST 2010 1,58,44,947 1,62,44,947 4,00,000 SEPT 2010 1,57,74,545 1,64,74,545 7,00,000 OCT. 2010 2,08,35,764 2,11,29,764 2,94,000 NOV. 2010 2,23,35,065 2,24,69,104 1,34,039 DEC. 2010 2,51,31,871 2,54,59,871 3,28,000 JAN. 2011 1,86,88419 1,89,38419 2,50,000 FEB. 2011 2,92,21,290 2,92,21,290 - MARCH 2011 3,36,68,854 3, 36,68,854 - 20,40,72,020 20,65,79,072 25,07,052 29. THE ABOVE RECEIPTS COMPRISES OF AMOUNTS RECEIVE D FROM CUSTOMERS. SERVICE TAX AT THAT POINT OF TIME WAS P AYABLE ON RECEIPT BASIS, THUS AMOUNT RECEIVED FROM CUSTOMERS IS EITHE R ADVANCES OR AMOUNT RECEIVED FOR BOOKING AS SALES ON LATER DATE. WE ALSO FIND THAT THE DETAILS OF PARTY WISE, FLAT WISE WORKING OF OPE NING AMOUNT SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 40 RECEIVABLE, AS WELL AS SALES RECORDED DURING THE YE AR, AMOUNT REFUNDED/AMOUNT ADJUSTED DURING THE YEAR AND CLOSIN G BALANCE HAS BEEN PLACED AT PAGE 365 TO 375 OF PAPER BOOK AND ON PERUSAL OF THE SAME IT EMERGES THAT TOTAL SALES FOR THE YEAR AT RS .16,40,82,458/-, OPENING ARE CLOSING BALANCE OF SUNDRY DEBTORS AS ON 1.4.2010 AND 31.3.2011 TALLIES WITH THE NET OF ADVANCES I.E. ADV ANCE FROM CUSTOMERS LESS RECEIVABLE FROM CUSTOMERS AS APPEARI NG IN THE REGULAR BOOKS OF ACCOUNTS. SIMILARLY TAXABLE RECEIPTS MENTI ONED AT PAGE-7 OF LPS-25 MATCHES WITH THE TAXABLE SERVICES LIABLE FOR SERVICE TAX APPEARING AT PAGE 5 OF LPS-25 WHICH ALSO MATCHES WI TH THE SERVICE TAX RETURNS. THE ONLY DIFFERENCE IS ON ACCOUNT OF GROSS RECEIPTS WHICH ARE INCLUSIVE OF SERVICE TAX @2.5%. IN VIEW OF OUR ABOVE DISCUSSION AND IN-DEPTH EXAMINATION OF FACTS WE FIND THAT EXCE PT FOR RS.25,07,052/- THERE WAS NO MISMATCH OF THE ALLEGE D INCRIMINATING DOCUMENT ATPAGE-7 OF LPS-25 WITH THE RECEIPTS SHOWN BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNTS AND THE A LLEGED DIFFERENCE OF RS.25,07,052/- WHICH IS APPROXIMATELY 1% OF GRO SS RECEIPTS, THAT TOO BEING THE PART OF ROUGH CALCULATION THUSCANNOT BE TAKEN AS A BASIS FOR REJECTING THE BOOKS OF ACCOUNTS AND INVOK ING PROVISIONS SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 41 UNDER SECTION 145(3) OF THE ACT. THEREFORE THERE I S NO JUSTIFICATION IN THE FINDING OF LD. A.O IN REJECTING THE BOOKS OF AC COUNTS. WE ALSO FIND THAT THE WORKING OF NET UNACCOUNTED RECEIPTS B Y THE LD. A.O WAS BASED ON WRONG ASSUMPTIONS, INCORRECT FIGURE, WITHO UT UNDERSTANDING THE LAWS OF SERVICE TAX ABOUT TAXABLE AND NON TAXABLE SERVICES AND MOST IMPORTANTLY NO INCRIMINATING MATE RIAL FOR ANY OF THE OTHER ASSESSMENT YEARS EXCEPT FOR ASSESSMENT YE AR 2011-12 WAS FOUND. 30. IT IS ALSO PERTINENT TO NOTE THAT THE LD. A.O I N PARA-4, SUB-POINT 2 OF THE ASSESSMENT ORDER HAVE ACCEPTED THAT THE FI GURES TAKEN BY HIM ARE NOT CORRECT AND THE SAME CAN BE INFERRED FR OM THE FOLLOWING FINDING; 4.2 WHILE WORKING OF THIS TOTAL RECEIPT FOR ASSESS MENT YEAR 2011-12 AS PER RETURN OF INCOME, THE ADVANCES RECEI VED FROM CUSTOMERS FOR ASSESSMENT YEAR 2011-12 WERE CONSIDER ED WRONGLY AT RS.3,83,11,545/- AS AGAINST THE CORRECT FIGURE OF R S.14,37,91,113/- AND THE ADVANCES RECEIVED FROM CUSTOMERS FOR ASSESS MENT YEAR 2010-11 WERE CONSIDERED WRONGLY AT RS.2,07,81,573/- AS AGAINST THE SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 42 CORRECT FIGURE OF RS.6,14,76,821/-. IT IS SEEN THA T THE FIGURES WRONGLY CONSIDERED AS ADVANCES RECEIVED FROM CUSTOMERS FOR ASSESSMENT YEAR 2010-11 AND 2011-12 ARE ACTUALLY ADVANCES RECEIVED FROM CUSTOMERS REFLECTED IN SCHEDULE-VII OF THE BALANCE SHEET. TH E ABOVE OBSERVATION OF THE LD. A.O ITSELF SHOWS THAT HE WAS NOT CERTAIN ABOUT THE FACTS AND FIGURES ADOPTED FOR COMPUTING THE SUPPRESSED RE CEIPTS AND IT SEEMS THAT HE HAD A PRE DETERMINED NOTION OF MAKING HIGH PITCH ADDITIONS BASED ON SUCH INCORRECT FACTS AND FINDING S. THEREFORE THERE IS NO DISPUTE TO THE FACT THAT THE ESTIMATION UP TO ESTIMATION MADE BY THE LD. A.O WAS VERY UNREASONABLE BECAUSE O F THE FOLLOWING; (A) HE TOOK FIGURES WRONGLY, (B) HE TOOK THE SALES FOR 9 MONTHS AND EXTRAPOLATED FOR 12 MONTHS, (C) HE HIMSELF ESTIMATED THE FIGURES FOR ONE YEAR A ND COMPUTED HYPOTHETICAL FIGURE FOR THE SEVEN YEARS WITHOUT HAV ING ANY INCRIMINATING MATERIAL IN HIS POSSESSION SHOWING TH E SUPPRESSED RECEIPTS FOR OTHER YEARS. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 43 (D) HE ALSO ASSUMED THE SALES OF UNACCOUNTED FIGURE FOR ALL THE YEARS WITH THE SAME PERCENTAGE OF 49% WITHOUT HAVIN G ANY BASIS FOR SUCH EXTRAPOLATION. 31. IT IS A WELL KNOWN FACT THAT IF THE BASIC FOUND ATION FOR MAKING A BUILDING COMPRISES OF WRONG PROPORTION OF MATERIALS AND POOR SCALING, THEN THE BUILDING MADE ON SUCH FOUNDATION CANNOT ST AND FOR LONG. SIMILAR IS THE SITUATION IN THE INSTANT CASE WHEREI N THE LD. A.O HAS QUOTED INCORRECT FIGURES, WRONG ESTIMATION, POORLY CORROBORATED THE MATERIAL FOUND DURING THE COURSE OF SEARCH WITH THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WHICH HAS RESUL TED INTO SUCH ABSURD ADDITION OF RS.35,23,47,102/- FOR ASSESSMENT YEAR2007-08 TO 2013-14. EVEN LD. CIT(A) GRAVELY ERRED IN NOT B RINGING THE CORRECT FACTS IN HIS FINDING AND MERELY SUSTAINED THE ADDIT ION APPLYING NET GROSS PROFIT AT 34.20% ON THE ALLEGED UNACCOUNTED R ECEIPTS. WE FIND NO JUSTIFICATION IN THE FINDING OF LD. CIT(A) BECAU SE THE GROSS PROFIT RATE HAS TO BE APPLIED ON UNACCOUNTED RECEIPTS BUT WHEN THE VERY BASIS I.E. UN ACCOUNTED RECEIPTS HAVE BEEN WRONGLY CALCULATED OR COMPUTED THEN THE APPLICATION OF SUCH GROSS PROFIT RATE HAVE NO L EGS TO STAND FOR. WE SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 44 ACCORDINGLY DISMISS THE COMMON GROUND NO.1 & 2 REL ATING TO GROSS PROFIT ADDITION MADE BY THE CIT(A). 32. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE AND DETAILED FINDING OF FACTS MENTIONED HEREINABOVE ARE OF THE CONSIDERED VIEW THAT THE VERY BASIS ADOPTED BY LD. A.O FOR MAKING THE ADDITION FOR SUPPRESSED RECEIPTS IS FATAL, INCO RRECT AND HAS NO JUSTIFICATION BECAUSE THE DOCUMENT I.E. PAGE-7 OF L PS-25 RELIED ON BY THE LD. A.O FOR COMPLETING THE SUPPRESSED RECEIPTS HAS NOT BEEN EXAMINED PROPERLY AND THUS GRAVELY ERRED IN REJECTI NG BOOKS OF ACCOUNTS BY INVOKING PROVISION OF SECTION 145(3) OF THE ACT. ON OUR PERUSAL AND EXAMINATION OF THIS DOCUMENT WE FIND TH AT THE FIGURES MENTIONED IN THE SEIZED DOCUMENT I.E. PAGE7 OF LPS 25 WERE ALMOST TALLYING TO THE FIGURES MENTIONED IN REGULAR BOOKS OF ACCOUNTS WITH A MINOR DIFFERENCE OF THE GROSS RECEIPTS WHICH ITSELF CANNOT LEAD TO BE A BASIS FOR THE ADDITIONS ON ACCOUNT OF SUPPRESSION O F RECEIPTS @49%. WE THEREFORE SET ASIDE THE FINDINGS OF BOTH THE LOW ER AUTHORITIES AND DELETE THE ADDITION OF RS.69,00,089/-, RS.2,24,79,4 32/-, 12,78,87,463/-, RS.4,44,46,990/-, RS.8,04,83,704/- ,RS.8,17,65,797/- & RS.8,83,83,627/-. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 45 33. WE ACCORDINGLY ALLOW THE RELEVANT GROUND NO.3 IN ALL THE SEVEN APPEALS RAISED BY THE ASSESSEE RELATING TO ADDITION FOR SUPPRESSED RECEIPTS AND DISMISS RELEVANT GROUND RAISED BY REVE NUE ON THE ISSUE OF SUPPRESSION OF RECEIPTS FOR ASSESSMENT YEARS 20 07-08 TO 2013-14. COMMON GROUND NO.4 RAISED BY THE ASSESSEE BECOMES I NFRUCTUOUS AS WE HAVE ALREADY ALLOWED GROUND NO.3 FOR ASSESSME NT YEAR 2007- 08 TO ASSESSMENT YEAR 2013-14 AND DELETED TOTAL ADD ITION FOR SUPPRESSION OF RECEIPTS. 34. NOW WE TAKE UP THE ASSESSEES APPEAL AGAINST TH E ADDITION MADE ON UNDUE BENEFIT TO DIRECTORS FOR ASSESSMENT Y EARS 2008-09, 2009-10, 2012-13 AND 2013-14 AT RS.10,85,000/-, RS. 43,49,100/- RS. 1,05,100/- AND RS. 2,13,600/- RESPECTIVELY. 35. BRIEF FACTS RELATING TO THE COMMON ISSUE OF UND UE BENEFIT TO THE DIRECTORS ARE THAT THE ASSESSEE COMPANY HAS CONSTRU CTED COMMERCIAL COMPLEX AT CITY CENTRE AND SOLD SOME SHOPS TO DIREC TORS OF THE COMPANY AND THEIR FAMILY MEMBERS. ALSO, FEW PROPERT IES AT SOUMYA ESTATE, KHAJURI KALAN, BHOPAL WERE ALSO SOLD TO DIR ECTORS. THE SALE VALUES AS PER THE REGISTRY OF THE SHOPS AND PLOTS W ERE CREDITED TO SALE ACCOUNT OF COMPANY. IT WAS ALLEGED BY LD. AO THAT THE ASSESSEE COMPANY HAS TRANSFERRED THE SAID PROPERTIES AT BELO W COLLECTOR RATES PREVAILING IN THAT AREA, IN ORDER TO (A) PROVIDE BE NEFIT TO DIRECTORS (B) SUPPRESS THE INCOME OF ASSESSEE COMPANY. HOWEVER NO EVIDENCE OF 'ON MONEY' WAS RECEIVED. THE DIFFERENCE BETWEEN THE STAMP DUTY SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 46 VALUE AND REGISTERED SALE VALUE WAS ADDED AS INCOME OF ASSESSEE COMPANY. THE FOLLOWING CHART FORMS THE BASIS OF AD DITION; S. NO DATE PROPERTY PURCHASER SALE CONSIDERATIO N STAMP DUTY VALUATION/MV AMOUNT ADDED 1 12.07.2007 T-4, CITY CENTRE, PRESS COMPLEX, M.P.NAGAR, BHOPAL SMT. ANJANA SINHA, SHRI SANJAY SINHA, RAJEEV SHARMA 25,25,000/- 36,10,1000/- 10,85,000/- 2 28.4.2008 G-03, CITY CENTRE, PRESS COMPLEX, M.P.NAGAR, BHOPAL SMT. ANJANA SINHA, SHRI SANJAY SINHA, RAJEEV SHARMA 26,87,100/- 38,55,000/- 11,67,900/- 3 14.5.2008 LG-01 &02, CITY CENTRE, PRESS COMPLEX, M.P.NAGAR, BHOPAL SMT. ANJANA SINHA 33,90,400/- 47,42,000/- 13,51,600/- 4 14.5.2008 LG-16 &17, CITY CENTRE, PRESS COMPLEX, M.P.NAGAR, BHOPAL SMT. ANJANA SINHA 19,63,100/- 27,46,000/- 7,82,900/- 5 25.10.2011 PLOT NO.51, SOUMYA ESTATE, SMT. ANJANA SINHA 18,50,000/- 19,55,100/- 1,05,000/- SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 47 KHAJURI KALAN, BHOPAL 6 14.05.2008 LG-18 &19, CITY CENTRE, PRESS COMPLEX, M.P.NAGAR, BHOPAL SMT. MANJU SHARMA 26,25,500/- 36,72,200/- 10,46,700/- 7 29.03.2012 PLOT NO.111, SOUMYA ESTATE, KHAJURI KALAN, BHOPAL SMT. MANJU SHARMA 26,11,000/- 28,24,600/- 2,13,600/- 36. IT WAS SUBMITTED BEFORE LD. CIT(A) THAT NOTHING INCRIMINATING WAS FOUND IN SEARCH TO THAT ANY UNREASONABLE BENEFI T WAS GIVEN TO DIRECTORS. THE PROVISIONS OF SEC 43CA, WHICH EMPOWE R THE ADDITION OF DIFFERENCE IN STAMP DUTY RATE AND REGISTERED SAL E VALUATION WAS APPLICABLE FROM A.Y. 2014-15, THUS NO ADDITION CAN BE MADE FOR A.Y. 2008-09 TO A.Y. 2013-14. COLLECTOR RATE OR THE STA MP DUTY RATE IS NOT BEST TOOL TO MEASURE FAIR MARKET VALUE OF ANY IMMOV ABLE PROPERTY. FURTHER, EVEN IT WAS SOLD BELOW MARKET RATE, IN ANY CASE, SAME CANNOT BE ADDED UNLESS ANY EVIDENCE OF ON-MONEY I S FOUND. K.P. VERGHESE 131 ITR 597 (SC). SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 48 37. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) BUT FAILED TO SUCCEED AS LD. CIT(A) CONFIRMED OBSERVING AS FOL LOWS; ON PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THAT THE APPELLANT ASSESSEE HAS SOLD DIFFERENT FLATS TO THE DIRECTORS OF THE CO MPANY AND FAMILY MEMBERS OF THE DIRECTORS AT RATES, BELOW THE FAIR M ARKET VALUE OF THE LAND THEREBY, PROVIDING DIRECT BENEFITS TO THE DIRECTORS 0OF THE COMPANY AND THEIR FAMILY MEMBERS AND INDIRECTLY REDUCING THE RE CEIPTS AND INCOME OF THE COMPANY. THE CONTENTION OF THE APPELLANT IS FOUND TO BE INCO RRECT BECAUSE IF THE PROPERTY IS TO BE SOLD THEN THE SAME SHOULD HAVE BE EN SOLD AT FAIR MARKET VALUE/ OR AT COLLECTOR GUIDELINE RATES BUT WAS SOLD AT BELOW FAIR MARKET VALUE. NO MATERIAL EVIDENCE HAS BEEN HELD BY THE AP PELLANT ASSESSEE TO SUBSTANTIATE ITS CLAIM THAT THE PROPERTIES ARE SOLD AT FAIR MAR ET VALUE NOR WAS ANY INABILITY TO PRODUCE THE SAME WAS SHOWN. IN VIEW OF THE FOREGOING DISCUSSION AND IN ABSENCE OF ANY MATERIAL EVIDENCE I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE A. 0. AND THE ADDITIONS AS MENTIONED LOW MADE BY THE A.O ON ACCOUNT OF UNDUE BENEFITS TO DIRECTORS AND THEIR FAMILY MEMBERS ARE CONFIRMED. A.Y UND UE BENEFITS GIVEN TO THE DIRECTORS AND THEIR FAMILY MEMBERS 2008 - 09 10,85,000/ - 2009 - 10 43,49,100/ - 2012 - 13 1,05,100/ - 2013 - 14 2,13,600/ - SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 49 THE GROUNDS OF APPEAL FOR A.YS 2008-09, 2009-10, 20 12-13 & 2013-14 ARE DISMISSED. 38. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 39. THE LD. COUNSEL FOR THE ASSESSEE MADE FOLLOWING SUBMISSIONS; (A) NO INCRIMINATING MATERIAL : IT IS SUBMITTED THAT THE TRANSACTIONS WERE ALREADY RECORDED IN THE BOOKS. THIS FACT WAS N EVER DENIED BY THE DEPARTMENT. DURING COURSE OF SEARCH, NOTHING IN CRIMINATING WAS FOUND TO SHOW THAT ANY ON-MONEY OR UNDERHAND DEALIN G TOOK PLACE IN THE GIVEN CASE. AS HELD IN VARIOUS CASES, ADDITION IN SEARCH CASES, CAN BE MADE ONLY ON BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH, MORE SO, IN THE CASE OF NON-ABATED ASSESSME NTS. THE CURRENT F.Y. WAS A CASE OF NON ABATED ASSESSMENT AS THE ASS ESSMENT FOR AY. 2008-09 WAS ALREADY COMPLETED PRIOR TO THE DATE OF SEARCH. CLT VS CONTINENTAL WAREHOUSING CORPORATION58 TAXMANN.COM 7 8 (BOM.) OM SHAKTHY AGENCIES (MADRAS) P LTD. 1571TD 1062 (TRIB. CHENNAI) PARAG M. SANGHVI 63 TAXMANN.COM 118 (TRIB. MUMBAI) CLT VS KABUL CHAWLA 380 ITR 573 (DEL.) CLT VS LATA JAIN (DEL HC) . ( B) COMPARABLE SALES: THE SUMMARY OF THE SIMILAR PROPERTIES SOLD TO PERSONS OTHER THEN DIRECTORS, WITH THEIR PER SQFT R ATE IS AT PS 426. THIS WHEN COMPARED TO THE PER SQ FT RATE OF THE PRO PERTIES SOLD TO DIRECTORS CLEARLY SHOWS THAT THE RATE AT WHICH THE CITY CENTRE SHOPS ARE SOLD TO DIRECTORS ARE AT OR ABOVE THE PRICE AT WHICH THE PROPERTIES WERE SOLD TO OTHERS. (PS 427). THE SALE PRICE IN TH EIR CASES HAVE BEEN SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 50 ACCEPTED. THE REGISTRIES OF CITY CENTRE OFFICE PROP ERTY SOLD TO OTHER THEN DIRECTORS ARE AT PS 428- 474. (C) STAMP VALUE NOT BEST ESTIMATE . HINDUSTAN MOTORS LTD VS MEMBERS, APPROPRIATE AUTHORITY (2001) 249 ITR 424 ( MAD.). GUIDELINE VALUED FOR COLLECTION OF STAMP DUTY, NO A PPLICATION OF DETERMINING MARKET VALUE. (D) SECTION 50C/43CA NOT APPLICABLE : THE ASSETS UNDER CONSIDERATION ARE THE COMMERCIAL SHOPS IN CITY CENT RE AND PLOTS AT SOUMYA ESTATE, BHOPAL. THESE ARE STOCK IN TRADE AND NOT CAPITAL ASSET, THUS PROVISIONS OF SEC 50C ARE NOT APPLICABL E. INCOME BOOKED THERE FROM HAS BEEN ACCEPTED AS BUSINESS INCOME IN REGULAR ASSESSMENT AND ALSO IN 153A ASSESSMENTS. PROVISIONS OF SECTION 43CA PROVIDING FOR SALE CONSIDERATION AS STAMP VALU E, ARE NOT APPLICABLE IN GIVEN CASE, AS THE A.Y INVOLVED IS A. Y 2008-09. THE PROVISIONS OF THIS SECTION ARE PROSPECTIVE AND ARE APPLICABLE W.E.F A.Y. 2014-15. PRIOR TO THIS AMENDMENT, THE SETTLED LAW WAS THAT RIGOURS OF SEC 50C, WERE NOT APPLICABLE TO STOCK IN TRADE. 40. HE FURTHER SUBMITTED THAT HON,BLE HIGH COURT OF MADRAS K.R. PALANISAMY VS. UNION OF INDIA 306 ITR 61/219 CTR 32 3. (PB 475- 487) AND ALSO HELD IN NEELKAMAL REALTORS & ERECTORS INDIA (P) LTD 79 TAXMANN 238 (BOM.)(PB-487A-487G)THAT IN RESPECT OF STOCK-IN TRADE, SEC 50C WOULD NOT APPLY. THE RELEVANT PORTION OF THE JU DGEMENT IS 'A BARE SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 51 PERUSAL OF THE PROVISION OF SEC 50C INDICATES THAT WHERE THE CONSIDERATION RECEIVED ON TRANSFER IF A CAPITAL ASS ET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE STAMP DUTY VALUE , THEN FOR THE PURPOSE IF SECTION 48, THE STAMP VALUE SHALL BE CON SIDERED AS FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT O F TRANSFER. SECTION 48 WITH THE CAPTION 'MODE OF COMPUTATION' DELAS WITH T HE COMPUTATION OF THE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS '. A CURSORY LOOK AT THE ABOVE PROVISION FAIRLY INDICATES THAT SECTIO N 50C IS APPLICABLE ONLY IN RESPECT OF INCOME COMPUTED UNDER CHAPTER IV -E, I.E. UNDER THE HEAD CAPITAL GAINS. SINCE THE ASSESSEE IS A DEVE LOPER AND INCOME FROM SALE OF FLATS HAS BEEN COMPUTED UNDER CHAPTER IV-D, I.E. UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION , OBVIOUSLY THE PROVISION OF SECTION 50C CAN HAVE NO APPLICATION. FMV IS IRRELEVANT UNLESS ON-MONEY IS PROVED. CASE: K.P. VERGHESE 13 1 ITR 597 (SC). THUS, IT IS ESTABLISHED THAT THE PROPERTIES HAVE BE EN SOLD TO THE DIRECTORS AT MARKET RATE AND NO UNREASONABLE BENEFI T WAS GIVEN TO THE DIRECTORS. NO EVIDENCE OF ON-MONEY IS AVAILA BLE ON RECORD. NO ADDITION IS POSSIBLE ON WHIMSICAL GROUNDS THAT UNR EASONABLE BENEFIT WOULD HAVE BEEN GIVEN TO THE DIRECTORS. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 52 41. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED SUPPORTING THE ORDERS OF LOWER AUTHORITIES. 42. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE ADDITION MADE BY THE LD. A.O RELATE S TO DIFFERENCE BETWEEN THE SALE CONSIDERATION SHOWN IN THE SALE DE ED AS AGAINST STAMP DUTY VALUATION ADOPTED BY THE STAMP AUTHORITY FOR CALCULATING STAMP DUTY. THOUGH THE LD. A.O HAS NOT MENTIONED S ECTION 50C OF THE ACT FOR MAKING THE IMPUGNED ADDITION BUT THE BA SIS OF MAKING THE ADDITION HAS BEEN ADOPTED FROM SECTION 50C OF T HE INCOME TAX ACT. THE UNDISPUTED FACTS EMERGING OUT OF THE RECO RD ARE THAT THE ALLEGED TRANSACTIONS WERE DULY RECORDED IN THE BOOK S. THERE WAS NO IOTA OF EVIDENCE IN THE FORM OF INCRIMINATING DOCUM ENTS TO SHOW THAT ANY ON MONEY OR UNDERHAND DEALING TOOK PLACE IN T HE CASE OF THE IMPUGNED TRANSACTIONS. THE PROPERTIES SOLD IN QUES TION WERE COMMERCIAL PROPERTIES WHICH APART FROM THE DIRECTOR S WERE ALSO SOLD TO THE OTHER UNRELATED PARTIES. THERE IS NO OBSERVA TION OF BOTH THE LOWER AUTHORITIES WHICH COULD SHOW THAT THE ASSESSE E HAD A DIFFERENT SET OF RULE FOR THE UNRELATED PARTIES AND ANOTHER F OR THE RELATED SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 53 PARTIES WHICH MEANS THAT PROPERTIES SOLD TO THE DIRECTORS/RELATIVES/FAMILY MEMBERS WERE AT THE FAIR MARKET PRICE. 43. NOW THE ISSUE REMAINS WHETHER THE PROVISIONS O F SECTION 50C OF THE ACT ARE APPLICABLE TO SUCH TRANSACTION OR NOT. WE FIND THAT THE SAID PROVISIONS CANNOT BE APPLIED TO THESE TRANSACT IONS BECAUSE THE IMMOVEABLE PROPERTIES AND COMMERCIAL SHOPS WHICH AR E PART OF STOCK IN TRADE OF THE ASSESSEE AND NOT THE CAPITAL ASSETS . NOW AS FAR AS SECTION 43C(A) OF THE ACT ARE CONCERNED WHICH REFER S TO SPECIAL PROVISIONS FOR FULL VALUATION OF CONSIDERATION OF T RANSFER OF ASSETS OTHER THAN CAPITAL ASSETS, WE FIND THAT THE SAID P ROVISION WAS BROUGHT INTO EFFECT FROM 01.04.2014 BY FINANCE ACT 2013 WHICH PROSPECTIVELY PROVIDES THAT IF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A SOCIETY (OTHER THAN CAPITAL ASSET) BEING LAND OR BUILDING OR BOTH THE IS LESS T HAN THE VALUE ADOPTED OR ASSESSABLE BY ANY AUTHORITY OF STATE GOV ERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE FOR THE PURPOSE FOR COMPUTING PROFITS AND ACCOUNTS FOR SUCH TO BE DEEME D WITH THE FULL SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 54 VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. 44. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE ARE OF THE CONSIDERED VIEW THAT NEITHER THE PROVISI ON OF SECTION 43CA OF THE ACT NOR THE PROVISIONS OF SECTION 50C OF TH E ACT ARE APPLICABLE ON THE IMPUGNED TRANSACTIONS OF SALE OF COMMERCIAL SHOPS HELD BY THE ASSESSEE AS STOCK IN TRADE TO ITS DIRECTORS/FAM ILY MEMBERS AND FURTHER AS THE SALE CONSIDERATIONS RECEIVED BY THE ASSESSEE COMPANY ARE AT FAIR MARKET VALUE, THEREFORE NO SUCH ADDITIO N WAS CALLED FOR PROVIDING UNDUE BENEFITS TO THE DIRECTORS. WE ACCO RDINGLY SET ASIDE THE FINDING OF BOTH THE LOWER AUTHORITIES AND DELET E THE ADDITION OF RS.10,85,000/-, RS.43,49,100/-, RS.1,05,100/- AND R S.2,13,600/- FOR ASSESSMENT YEAR 2009-09, 2009-10, 2012-13 AND 2 013-14 RESPECTIVELY AND ACCORDINGLY ALLOW THIS COMMON ISSU E RAISED BY THE ASSESSEE. 45. NOW WE TAKE UP THE COMMON ISSUE RAISED BY THE A SSESSEE FOR ASSESSMENT YEARS 2011-12, 2012-13 AND 2013-14 FOR THE ALLEGED UNACCOUNTED TRANSACTIONS WITH FORTUNE GROUP FOR WHI CH ADDITION OF RS.5,00,000/-, RS.7,63,49,000/- AND RS.9,00,000/- H AS BEEN MADE SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 55 BY THE LD. A.O. 46. BRIEF FACTS OF THE CASE ARE THAT SURVEY OPERATI ONS WERE CARRIED OUT AT OFFICE PREMISES OF M/S FORTUNE BUILDERS LOCA TED AT 157, FORTUNE HOUSE, ZONE-I, M.P. NAGAR, BHOPAL ON 10.11. 2012 (18 DAYS PRIOR TO THE SEARCH ON ASSESSEE). OUT OF THE VARIOU S LOOSE PAPERS AND DOCUMENTS IMPOUNDED, ONE DIARY NAMED BS-1, ALLEGEDL Y CONTAINED TRANSACTIONS BETWEEN ASSESSEE COMPANY AND FORTUNE G ROUP. (REFER CIT{A) ORDER PG. NO 63 PARA 7.1). IT IS PERTINENT T O NOTE THAT THIS DIARY WAS NOT FOUND DURING SEARCH PROCEEDINGS CARRIED OUT AT ASSESSEE COMPANY BUT WAS RECOVERED DURING SURVEY OPERATIONS AT M/S FORTUNE BUILDERS. (AS PROVIDED IN SHOW CAUSE NOTIC E AT PB PAGE 491- 492). THIS DIARY IS NOT WRITTEN IN THE HANDWRITING OF ANY OF THE EMPLOYEES OF ASSESSEE. THE ASSESSEE DENIED THE CONT ENTS OF THE DIARY. RELEVANT PAGE 113-116 WHICH ALLEGEDLY RELATES TO AS SESSEE, CONTAINS DATE; AND AMOUNT PAID/ RECEIVED. THIS RELATES TO PE RIOD SEPT. 2010 TO JULY 2012. THE LD. AO DURING ASSESSMENT PROCEEDINGS ISSUED A SHOW CAUSE NOTICE, DATED 12.02.2015, ENQUIRING ABOUT THE TRANSACTIONS AND ALSO WHETHER THEY WERE DULY RECORDED IN 'BOOKS OF ACCOUNTS. IN ITS REPLY, THE ASSESSEE COMPANY DENIED TO HAVE ENTE RED INTO ANY SUCH SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 56 TRANSACTIONS WITH M/S. FORTUNE BUILDERS. (PB PAGE 4 93-494). THE SUBMISSIONS OF THE ASSESSEE COMPANY WERE NOT FOUND ACCEPTABLE AS THE LD. AO ALLEGED THAT THE DIARY CONTAINS DETAILS OF LAND PURCHASE. LD. AO RELATED SOME ENTRIES IN THE DIARY, WHICH WER E NOT RELATED TO ASSESSEE, TO BE MATCHING WITH CERTAIN TRANSACTIONS IN BANK ACCOUNT OF SOME OTHER PARTIES. AT ASSESSMENT ORDER PG. 6 AN D 7 - PAYMENTS TO SOME PATIDAR FAMILY ENTRIES AT PG. 1 OF THE DIARY R ELATING TO PERIOD 11.06.2009 TO 05.05.2010. THESE TRANSACTIONS WERE N OT RELATED TO ASSESSEE. THE PERIOD IS DIFFERENT AND IT RELATES TO SOME PATIDAR FAMILY. AT ASSESSMENT ORDER PG. 9 - RS. 20,00,000/- PAID ON 17.7.2012 TO ASHOK PALOD BY FORTUNE GROUP(ENTRIES A T PG. 73 OF DIARY). THIS RELATES TO PAYMENT MADE BY FORTUNE BUI LDERS TO ASHOK PALOD. THESE PAYMENTS WERE FOUND TO BE GENUINE BUT UNRECORDED IN BOOKS OF ACCOUNTS OF FORTUNE BUILDERS. IN LIGHT OF ABOVE FACTS, THE LD AO ASSUMED THAT ALL THE TRANSACTIONS RECODED IN DIA RY BS-1 ARE GENUINE AND CORRECT. HE THEREFORE ADDED BOTH DEBIT AND CREDIT AND MADE ADDITION OF RS.5,00,000/-, RS.7,63,49,000/- AN D RS.9,00,000/- OBSERVING AS UNDER; SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 57 7.1 A SURVEY WAS CONDUCTED BY ACIT-1(2), BHOPAL AT THE OFFICE PREMISE OF M/S FORTUNE BUILDERS LOCATED AT 157, FORTUNE HOUSE, ZONE-L, MP NAGAR, BHOPAL ON 10.11.2012. DURING THE COURSE OF SURVEY P ROCEEDINGS VARIOUS LOOSE PAPERS/ DOCUMENTS WERE IMPOUNDED. OUT OF THES E DOCUMENTS, ONE DIARY NAMELY BS-I WAS IMPOUNDED AND THERE WERE SEVE RAL TRANSACTIONS BETWEEN THE ASSESSEE COMPANY AND FORTUNE GROUP. THE DETAILS OF TRANSACTIONS IS AS UNDER: M/S SOUMYA HOMES PVT. LTD. DATE PARTICULARS DEBIT CREDIT. PAGE NO 25.09.2010 500000 113 04.04.2011 300000 113 05.04.2011 2000000 113 06.04.2011 5000000 113 0L.06.2011 PAI D 2800000 113 09.06.2011 READ 400000 113 04.10.2011 READ 1000000 113 05.L0.2011 2000000 113 19.10.2011 900000 113 16.11.2011 600000 113 18.11.2011 2500000 113 21.11.2011 600000 113 23.11.2011 1000000 113 26.12.2011 R EAD 2200000 114 04.07.2011 READ 500000 114 25.7.2011 READ 1250000 114 05.08.2011 READ 1600000 114 25.08.2011 READ 1750000 114 29.08.2011 READ 2500000 114 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 58 14.09.2011 3000000 114 19.09.2011 READ 1600000 114 21.09.2011 READ 500000 114 23.09 .2011 READ 7500000 114 23.09.2011 INT.RECD 375000 114 21.09.2011 READ 500000 114 23.09.2011 PAID 5000000 114 05.01.2012 2800000 114 15.01.2012 924000 114 08.02.2012 3000000 114 21.02.2012 1000000 114 01.03.2012 1000000 116 28.07.2012 400000 116 31.07.2012 500000 116 TOTAL 97,00,000 6,80,49,000 7.2 ACCORDINGLY A SHOW CAUSE NOTICE DATED 12/2/2015 WAS ISSUED TO THE ASSESSEE WHEREIN THE ASSESSEE WAS ASKED AS WHETHER THESE TRANSACTIONS AS MENTIONED ABOVE HAVE BEEN DULY ACCOUNTED IN ITS BOO KS OF ACCOUNTS OR NOT. IT WAS ALSO REQUIRED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE ADDED TO ITS TOTAL INCOME. 7.3 IN RESPONSE TO THIS NOTICE, THE ASSESSEE SUBMIT TED AS UNDER: 'WE HAVE BEEN SERVED WITH A SHOW CAUSE NOTICE IN CO NNECTION WITH IMPOUNDING OF A ALLEGED DIARY DURING THE COURSE OF SURVEY PROCEEDING U/S 133A ON 10.11.2012 AT BUSINESS PREMISES OF M/S FORT UNE BUILDERS, BHOPAL LOCATED AT 157, FORTUNE HOUSE, ZONE-I, MP. N AGAR, BHOPAL. IT HAS BEEN ALLEGED THAT THE SAID DIARY AT PAGE 113, 114 A ND 116 RECORDS CERTAIN TRANSACTIONS IN THE NAME OF OUR COMPANY. IT HAS BEE N FURTHER STATED IN SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 59 THE SHOW CAUSE NOTICE THAT THE GENUINENESS OF THE T RANSACTIONS MENTIONED IN THE DIARY HAS BEEN ESTABLISHED. 1N THIS CONNECTI ON WE HAVE TO STATE AS UNDER:- 1. THE CATEGORICALLY DENY THAT OUR COMPANY HAS ENTE RED INTO ANY SUCH TRANSACTION WITH M/S. FORTUNE BUILDERS, BHOPAL AND THE ENTRIES MENTIONED IN YOUR SHOW CAUSE NOTICE ARE HEREBY CATEGORICALLY DENIED BY US. 2. NO REASONS HAVE BEEN PROVIDED IN THE SHOW CAUSE NOTICE AS TO HOW THE GENUINENESS OF THE DIARY ITSELF AND THE TRANSACTION S MENTIONED IN THE DIARY HAS BEEN ESTABLISHED. MERE STATEMENT TO THIS EFFECT IS NOT SUFFICIENT. 3. FROM THE SEQUENCE OF THE ENTRIES IN THE DIARY, A S MENTIONED IN THE SHOW CAUSE NOTICE, IT IS CLEARLY ESTABLISHED THAT THE EN TRIES IN THE ALLEGED DIARY HAVE NOT BEEN RECORDED IN DAY TO DAY COURSE OF BUSI NESS. THE DIARY CANNOT BE TREATED AS A 'BOOKS OF ACCOUNTS '. ANY LIABILITY CANNOT BE FASTENED ON ANY PERSON MERELY ON THE BASIS OF ENTRIES IN SUCH D IARY. 4. THERE IS NO MENTIONED IN THE SHOW CAUSE NOTICE W HETHER M/S. FORTUNE BUILDERS, BHOPAL HAVE ADMITTED THE CORRECTNESS OF T HE DIARY. 5. IN ANY CASE, ADDITION U/S 6T) CAN BE MADE ONLY O N THE PERSON IN WHOSE BOOKS OF ACCOUNTS ANY SUM IS FOUND CREDITED. IT IS AN ADMITTED POSITION THAT THE ALLEGED DIARY HAS BEEN FOUND AND IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDING 11/S 133 A FROM THE BUSINESS PREM ISE OF M/S. FORTUNE BUILDERS, BHOPAL LOCATED AT 157, FORTUNE HOUSE, ZON E-I, MP. NAGAR, BHOPAL. HUGE SURRENDER INCOME HAS ALREADY BEEN MADE BY THAT GROUP CONSIDERING EFFECT OF THE DOCUMENTS SEIZED FROM THE IR PREMISE AND FOUND DURING THE COURSE OF SURVEY. FOR THIS PURPOSE REFER ENCE MAY BE MADE TO THE PARE B-J OF PART B OF YOUR QUESTIONNAIRE DATED 14.07.2014.. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 60 7.4 THE SUBMISSION OF THE ASSESSEE HAS BEEN CONSIDE RED BUT THE SAME IS NOT ACCEPTABLE DUE TO THE FOLLOWING REASONS: I. THE ASSESSEE HAS DENIED TO HAVE ANY SUCH TRANSAC TIONS WITH FORTUNE GROUP. HOWEVER IT IS ON RECORD THAT THE ASSEESSEE H AS BUSINESS RELATION WITH M/S FORTUNE GROUP. 2. THE TRANSACTIONS APPEARING IN THE DIARY ARE DULY SUBSTANTIATED BY DOCUMENTARY EVIDENCE AS UNEARTHED BY THIS OFFICE. T HEREFORE ALL THE TRANSACTIONS APPEARING IN THE DIARY ARE CORRECT. TH E EVIDENCES SUBSTANTIATING CORRECTNESS OF THE ENTRIES APPEARING IN THE DIARY ARE AS UNDER: (A) PAGE NO. 1 OF THIS DIARY CONTAINS THE DETAILS O F LAND PURCHASE LANDMARK: S.NO. DATE PARTICULARS AMOUNT DEBIT CREDIT 1 11.06.2009 1800000 2 29.09.2009 650000 0 3 29.09.2009 6500000 4 08.L2.2009 4100000 5 08.L2.2009 350000 0 6 14.12.2009 BROTHER 25000 7 18.12.2009 100000 0 8 18.12.2009 300000 0 9 05.05.2010 400000 10 08.0 5 .2 0 L0 400000 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 61 PAGE NO. 1 OF THIS DIARY CONTAINS THE DETAILS OF LA ND PURCHASE' LANDMARK'. THIS LAND WAS PURCHASED FROM SOME PATIDAR FAMILY. B ANK ACCOUNTS OF THIS FAMILY WERE PERUSED AND IT WAS NOTICED THAT THE PAY MENTS AS MENTIONED IN THE DIARY ARE DULY REFLECTED IN THE BANK ACCOUNTS O F PATIDAR FAMILY. THE DETAILS ARE AS UNDER: S.NO. PARTICULARS AS MENTIONED IN THE IMPOUND DIARY TRANSACTIONS CORROBORATED BY CORRESPONDING ENTRIES IN THE BANK ACCOUNTS OF PATIDAR FAMILY 1 PAYMENT OF RS.18,00,000/- ON 11.6.2009 CASH DEPOSIT OF RS.18,00,000/ - IN A/C NO.903410110000409, BOI, MISROD IN THE NAME OF RAVIKANT PATIDAR ON 11.6.2009. 2. PAYMENT OF RS.1,30,00,000/- ON 29.9.2009 1. CASH DEPOSIT OF RS.28,00,000/- IN A/C NO.903410110000410, BOI, MISROD IN THE NAME OF RAVIKANT PATIDAR ON 01.10.2009. 2. CASH DEPOSIT OF RS.28,00,000/- IN A/C NO.903410110000410, BOI, MISROD IN THE NAME OF VIDYA PATIDAR ON 01.10.2009. 3. CASH DEPOSIT OF RS.28,00,000/- IN A/C NO.903410110000411, BOI, MISROD IN THE NAME OF SHASHIKANT PATIDAR ON 01.10.2009. 4. CASH DEPOSIT OF RS.28,00,000/- IN A/C NO.903410110000412, BOI, MISROD IN THE NAME OF GOVIND PATIDAR ON 01.10.2009. 3 PAYMENT OF RS.76,00,000/- CASH DEPOSIT OF RS.18,00,000/ - IN A/C NO.903410110000409, SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 62 ON 8.12.2009 BOI, MISROD IN THE NAME OF RAVIKANT PATIDAR ON 09.12.2009. 2. CASH DEPOSIT OF RS.19,00,000/- IN A/C NO.903410110000410, BOI, MISROD IN THE NAME OF VIDYA PATIDAR ON 09.12.2009. 3. CASH DEPOSIT OF RS.19,00,000/- IN A/C NO.903410110000411, BOI, MISROD IN THE NAME OF SHASHIKANT PATIDAR ON 09.12.2009. 4. CASH DEPOSIT OF RS.19,00,000/- IN A/C NO.903410110000412, BOI, MISROD IN THE NAME OF GOVIND PATIDAR ON 09.12.2009. 4 PAYMENT OF RS.25,000/- ON 14.12.2009 & PAYMENT OF RS.40,00,000/- ON 18.12.2009 1. CASH DEPOSIT OF RS.10,00,000/- IN A/C NO.903410110000409, BOI, MISROD IN THE NAME OF RAVIKANT PATIDAR ON 09.12.2009. 2. CASH DEPOSIT OF RS.10,00,000/- IN A/C NO.903410110000410, BOI, MISROD IN THE NAME OF VIDYA PATIDAR ON 09.12.2009. 3. CASH DEPOSIT OF RS.10,00,000/- IN A/C NO.903410110000411, BOI, MISROD IN THE NAME OF SHASHIKANT PATIDAR ON 09.12.2009. 4. CASH DEPOSIT OF RS.10,00,000/- IN A/C NO.903410110000412, BOI, SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 63 MISROD IN THE NAME OF GOVIND PATIDAR ON 09.12.2009. 5 PAYMENT OF RS.4,00,000/- ON 5.5.2010 & PAYMENT OF RS.4,00,000/- ON 8.5.2010 1. CASH DEPOSIT OF RS.5,00,000/ - IN A/C NO.903410110000409, BOI, MISROD IN THE NAME OF RAVIKANT PATIDAR ON 28.5.2010. 2. CASH DEPOSIT OF RS.5,00,000/- IN A/C NO.903410110000410, BOI, MISROD IN THE NAME OF VIDYA PATIDAR ON 28.5.2010. 3. CASH DEPOSIT OF RS.3,00,000/- IN A/C NO.903410110000411, BOI, MISROD IN THE NAME OF SHASHIKANT PATIDAR ON 1.6.2010. 4. CASH DEPOSIT OF RS.5,00,000/- IN A/C NO.903410110000412, BOI, MISROD IN THE NAME OF GOVIND PATIDAR ON 28.5.2010. AS CAN BE SEEN FROM THE ABOVE TABLE THAT THE DATE O F DEPOSIT IN THE BANK A AS WELL AS THE AMOUNT MENTIONED IN THE DIARY UNDER REFERENCE IS MATCHING TO THE CREDIT ENTRIES IN THE BANK ACCOUNTS OF PATID AR FAMILY. (B) PAGE NO. 1 TO 105 OF LPS-6 SEIZED FROM FS-3 IN THE CASE OF M/S FORTUNE BUILDERS, CONTAINS FOLLOWING DETAILS- 'COPY OF SALE DEED OF AGRICULTURE LAND KHASRA NO. 3 90, RAKBA 2.54 HECT. KHASRA NO. 398, RAKBA 1.13 HECT. TOTAL RAKBA- 7.68 HECT. SITUATED AT VILL. BHAROUPUR, PHN- 42, TEHSIL- HUZUR, DISTT.- BHOPAL T OTAL CONSIDERATION RS. 523296001- DATED 10.07.2007 BETWEEN (SELLER) 1) SMT. SHANTI DEVI DAGA W/O SHRI BRIJRATAN DAGA, R IO 5, YADULAL MALIK ROAD KOLKATA, 2) SHRI SHIVKISHAN DAGA S/O LATE SHRI GAURISHANKAR DAGA, SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 64 RIO 150/1, COTTON STREET, KOLKATA (ADIPD4147J) (PUR CHASER) 1) SHRI ASHOK PALOD S/O SHRI RADHESHYAMJI PALOD, RIO 151, ZONE-I, MP NAGAR, BHOPAL (ABEPP9496M) 2) SMT. NEETA MOHGAONKAR WLO SHRI AJAY MOHGAONKAR, RIO E-7/841 ARERA COLONY BHOPAL 3) SMT. RITU GUPTA W /0 SHRI SAMEER G UPTA RIO A-31, KOH-E-FIZA, BHOPAL.' THE PROPERTY WAS JOINTLY PURCHASED BY FORTUNE GROUP ALONGWITH SHRI ASHOK PALOD S/O SHRI RADHESHYAM JI PALOD, RIO 151, ZONE-I, MP NAGAR, BHOPAL (ABEPP9496M). FURTHER PAGE NO 26, OF LPS-13, SEIZED FROM FS-3 CONTAINS THAT AN AMOUNT OF RS. 20,00,000/-- WAS PAI D TO SHRI ASHOK PALED ON 17.07.2012. THERE IS NO DOUBT THAT AN AMOUNT OF RS.20,00,000/- WAS PAID TO SHRI ASHOK PALOD ON 17.07.2012 AND THE SAME IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. 7.5 IN THE LIGHT OF ABOVE FACTS, IT IS ESTABLISHED AND HELD THATALL THE TRANSACTIONS RECORDED IN THE DIARY ARE GENUINE AND CORRECT. HENCE THE DETAILS MENTIONED IN THE NAME OF M/S. SOUMYA HOMES PVT. LTD ARE ALSO CORRECT. ACCORDINGLY THE CLAIM OF THE ASSESSEE IS HEREBY REJECTED AND THE ADDITION IN THE TOTAL INCOME OF THE ASSESSEE. 47. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AGA INST THE IMPUGNED ADDITION OF RS.5,00,000/-, RS.7,63,49,000/ - AND RS.9,00,000/-. THE LD. CIT(A) SUSTAINED THE ADDITI ON OBSERVING AS UNDER; ON PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THA T DURING SURVEY AT THE OFFICE PREMISES OF M/S FORTUNE BUILDERS LOCATED AT 157, FORTUNE HOUSE, SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 65 ZONE-I, MP NAGAR BHOPAL ONE DIARY BS-1 WAS IMPOUNDE D WHICH CONTAINS DETAILS OF TRANSACTIONS BETWEEN THE APPELLANT COMPA NY AND M/S FORTUNE BUILDERS. THE APPELLANT ASSESSEE CATEGORICALLY DENI ED TO HAVE ANY TRANSACTION WITH M/S FORTUNE BUILDERS AND QUESTIONE D THE GENUINENESS OF THE DIARY UNDER CONSIDERATION. THE AO HAS CLEARLY P ROVEN THE GENUINENESS OF THE TRANSACTIONS OF THE DIARY IN HIS PARA 74(A) & 74(B) WHICH CONTAIN DETAILS OF VARIOUS TRANSACTIONS DONE BY M/S FORTUNE BUILDERS LIKE PAGE NO 1 OF THE DAIRY BS-L CONTAINS DETAILS OF LAND PURCHA SE LANDMARK FROM SOME PATIDAR FAMILY AND THE DIARY ENTRIES ARE DULY REFLECTED IN THE BANK ACCOUNT OF RAVIKANT PATIDAR AND PAGE NO 73 OF THE D IARY BS-L CONTAIN DETAILS OF PAYMENT ON 17.07.2012 TO PALODJI. A PROP ERTY WAS JOINTLY PURCHASED BY FORTUNE GROUP AND SHRI ASHOK PALOD AT KHASARA NO 390, RAKBA 2.54 HECT. KHASRA NO 398, RAKBA 1.13 HEET, TO TAL RAKBA 7.68 HECT SITUATED AT VILL BHAROUNPUR, PHN-42 TEHSIL HUZUR, D ISTT BHOPAL. WHICH PROVES TO HAVE A TRANSACTIONS BETWEEN SHRI ASHOK PA LOD AND FORTUNE GROUP AND THE SAME IS RECORDED IN DIARY BS-L IMPOUN DED DURING THE SURVEY. 8.2 ALSO, THE APPELLANT ASSESSEE WAS ASKED VIDE SHO W CAUSE NOTICE DATED 12.02.2015 TO RECONCILE THE ABOVE TRANSACTIONS IN T HE BOOKS OF ACCOUNT AND WAS REQUIRED TO EXPLAIN WHY SECTION 132( 4)A CL EARLY STATES THAT 'WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY , BULLION. JEWELLERY, OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, IT MAY BE PRESUMED THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULL ION, JEWELLERY, OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS T O SUCH PERSON, THAT THE CONTENT OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENT ARE TRUE '. IF THE ASSESSEE DISPUTES THE LIABILITY FOR TAX, IT IS THE LAW. IN THE ABSENCE OF ANY PROOF THE A.0 IS JUSTIFIED TO CHARGE IT AS TAXABLE INCOME. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 66 8.3 IN VIEW OF THE ABOVE DISCUSSION, THE TRANSACTIO N ENTRIES IN THE ABOVE MENTIONED HAS BUSINESS DEALING/TRANSACTIONS WITH TH E APPELLANT ASSESSEE LIKE FOURTUNE SOUMYA HOMES, CLEARLY SHOWS THERE WER E BUSINESS TRANSACTIONS AND DEALINGS BETWEEN THE APPELLANT COM PANY AND M/S FORTUNE BUILDERS AND THE DETAILS OF TRANSACTION AS MENTIONED IN THE DIARY BS-L ARE NOT RECORDED IN THE REGULAR BOOKS OF ACCOU NT OF THE APPELLANT COMPANY. THUS, THE ADDITIONS AS MENTIONED BELOW MAD E BY THE AO ON THIS ACCOUNT ARE CONFIRMED. A.Y UNRECORDED TRANSACTION WITH FORTUNE BUILDERS 2011 - 12 5,00,000 2012 - 13 7,63,49,000 2013 - 14 9, 00,000 THE GROUNDS OF APPEAL FOR A.Y. 2011-12 TO 2013-14 ARE DISMISSED. 48. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL PLEADING COMMON ISSUE AGAINST THE IMPUGNED ADDITION MADE FOR UNRECORDED TRANSACTION WITH FORTUNE BUILDERS. 49. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE W RITTEN SUBMISSIONS AND JUDGMENTS REFERRED THEREIN SUBMITTE D THAT THE ALLEGED DIARY BS-1, ON THE BASIS OF WHICH THE ADDIT IONS HAVE BEEN MADE WAS FOUND FROM THE PREMISES OF ANOTHER ASSESSE E M/S. FORTUNE BUILDERS DURING SURVEY ON 10.11.2012 WHEREAS SEARCH IN THE CASE OF SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 67 ASSESSEE TOOK PLACE AFTER 18 DAYS. HE SUBMITTED TH AT THERE WAS NO PAPER BELONGING TO M/S. FORTUNE GROUP DURING SEARCH . IT IS ALSO NOT ASCERTAINABLE AS TO WHETHER ANY ADDITION, ON THE BA SIS OF SUCH DIARY WAS MADE IN THE HANDS OF M/S. FORTUNE BUILDERS. FUR THER NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN TO THE A SSESSEE. THE TRANSACTIONS REFERRED IN THE DIARY RELATES TO SOME PATIDAR FAMILY WHICH HAS NO RELATION WITH THE BUSINESS TRANSACTION S OF THE ASSESSEE. 50. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED AND SUPPORTED THE ORDERS OF BOTH THE LOWER AUTHORIT IES. 51. WE HAVE HEAD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE JUDGMENTS RELIED BY LD. COUNSEL FOR THE ASSESSEE. THE ISSUE RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2011-12, 2012-13 AND 2013-14 IN ITS GROUND NO.5, GROUND NO.6 AND GROUND NO.6 RESPECTIVELY RELATES TO ADDITION FOR UNACCOUNTED TRANSACTIONS WITH M/S. FORTUNE GROUP. DURING THE COURSE OF SURVEY ON 10.11.12 AT M/S. FORTUNE BUILDE RS ONE DIARY NAMELY BS-1 WAS IMPOUNDED. THE SEARCH IN THE CASE OF THE ASSESSEE TOOK PLACE AFTER 19 DAYS FROM THE DATE OF SURVEY AT FORTUNE GROUP. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 68 IN THIS DIARY NAMED BS-1 THERE WERE CERTAIN ALLEGED TRANSACTIONS WHICH ALSO INCLUDED THE AMOUNT OF DEBIT AND CREDIT UNDER THE HEAD M/S. SOUMYA HOMES PVT. LTD. THE LD. A.O MADE ADDIT ION TO THE TOTAL OF DEBIT AND CREDIT ENTRIES. 52. LD. COUNSEL FOR THE ASSESSEE IN SUPPORT OF HIS CONTENTION THAT THE ALLEGED TRANSACTIONS ARE NOT RELATED TO THE ASS ESSEE MADE FOLLOWING WRITTEN SUBMISSIONS (A) THAT THE DIARY BS -L (PB 488-490) WAS FOUND FROM THE PREMISES OF M/S. FORTUNE BUILDER S DURING SURVEY ON 10.11.2012, AROUND 18-20 DAYS BEFORE SEARCH ON P REMISES OF ASSESSEE. IT IS ALSO AN UNDISPUTED FACT THAT THERE WAS NO DEALING OF ASSESSEE WITH FORTUNE BUILDERS. THE DIARY WAS NOT I N THE HANDWRITING OF EMPLOYEE OF ASSESSEE. IN OUR KNOWLED GE, NO STATEMENT OF THAT EMPLOYEE WAS RECORDED, ASKING FOR DETAILS I N THE DIARY. HE WAS NEVER CONFRONTED ABOUT THE DIARY. THERE IS NO CORRO BORATE EVIDENCE TO PROVE. IN ANY CASE, STATEMENT, IF ANY, WAS NOT CON FRONTED TO ASSESSEE FOR CROSS EXAMINATION. NO SUCH STATEMENT WAS REFERR ED IN THE ORDERS. THE DOCUMENT WHICH WAS THE BASIS OF ADDITION WAS NO T FOUND IN POSSESSION OF ASSESSEE, NOR IN HANDWRITING OF ASSES SEE. THE PERSON IN SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 69 WHOSE HANDWRITING IT WAS RECORDED WAS NEVER CONFRON TED. IT WAS ONLY ON CONJUNCTURES THAT IT WAS HELD THAT THESE REFLECT UNACCOUNTED PAYMENTS. IT IS A TRITE LAW, THAT STATEMENT OF THIR D PARTIES, ENTRIES IN BOOKS OF THIRD PARTIES, DO NOT BIND THE ASSESSEE. T HEY MAY BIND THIRD PARTIES IN THEIR OWN CASES, AND NOT THE ASSESSEE. T HE LATEST JUDGMENT IN THE SEQUENCE IS THE CASE OF COMMON CAUSE (SC), W HICH FOLLOWS THE LOCUS CLASSICS OF V.C. SHUKLA 1998 SCC 410. IT IS WELL SETTLED IN LAW THAT THE LOOSE PAPERS AND DOCUMENTS CANNOT POSSIBLY BE CONSTRUED AS BOOKS OF ACCOUNT REGULARLY KEPT IN THE COURSE OF BUSINESS. SUCH EVIDENCE WOULD, THEREFORE, BE OUTSIDE THE PURVIEW O F SECTION 34 OF THE EVIDENCE ACT, 1972. THEREFORE, THE REVENUE WOULD NO T BE JUSTIFIED IN RESTING ITS CASE ON THE LOOSE PAPERS, DIARY AND DOC UMENTS FOUND FROM THIRD PARTY IF SUCH DOCUMENTS CONTAINED NARRATIONS OF TRANSACTIONS WITH THE ASSESSEE AS DECIDED BY THE HON'BLE SUPREME COURT IN THE CASE OF CENTRAL BUREAU OF INVESTIGATION VS. V.C. SHUKLA (19 88) 8 SSC 410 AND CHUHARMAL VS. COMMISSIONER OF INCOME TAX (1 988) 172 250 138 TAXMAN 190 (SC). ALSO SHREE PARSHWANATH CONSTRU CTION 24 ITJ 409 (TRIB. INDORE) ADDL. CIT VS. LATA MANGESHKAR 97 /TR 696 (BOM.) . SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 70 (B) THERE IS NO MENTION IN THE SHOW CAUSE NOTICE P LACED AT (PB 491-492), WHETHER M/S. FORTUNE BUILDERS, BHOPAL HAV E ADMITTED THE CORRECTNESS OF THE DIARY AND WHETHER THEY HAVE PAID TAX ON SAME. LD AO CONCLUDED THAT THIS WAS PAYMENT MADE BY ASSESSEE TO M/S. FORTUNE BUILDERS AS THEY WERE DOING JOINT VENTURE P ROJECTS. NO BASIS FOR THE SAME WAS GIVEN. IT WAS ALSO WELL SETTLED I N CASE OF AMARJIT SINGH BAKSHT (HUF) VS. ASSISTANT COMMISSIONER OF I NCOME TAX (2003) 86 ITO 13 (DELHI) THAT WHERE DOCUMENT IN QUESTION WAS NOT RECOVERED FROM ASSESSEE'S PREMISES BUT WAS RECOVERED FROM THE PREMISES OF OTHER PERSON AND WAS NOT ALLOWED ANY OPPORTUNITY OF CROSS EXAMINATION AND FURTHER, NO TESTIMONY WAS NOT FOUND CREDIBLE AT ALL, IT COULD NOT BE SAID THAT THERE WAS ANY IOTA OF EVI DENCE TO SUPPORT REVENUE'S CASE THAT A HUGE FIGURE OVER AND ABOVE FI GURE BOOKED IN RECORDS AND ACCOUNTS CHANGED HANDS BETWEEN PARTIES AND THEREFORE, NO ADDITION COULD BE MADE BASED ON SUCH DOCUMENT IN HANDS OF ASSESSEE'. IT WAS ALSO HELD IN CASE OF PRADEEP AMR UTLAL RUNWAL VS. TRO-3, PUNE (2014) 47 TAXMANN.COM 293 THAT 'PRESUMP TION UNDER SECTION 132(4A) IS AVAILABLE ONLY IN RESPECT OF THE PERSON FROM WHOM THE PAPER IS SEIZED. IT COULD NOT BE APPLIED AGAINS T A THIRD PARTY AND SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 71 HENCE, NO ADDITION COULD BE MADE ON THE BASIS OF TH E EVIDENCE FOUND WITH THIRD PARTY. THE PRESUMPTION UNDER SECTION 132 (4A) OF THE ACT COULD BE USED ONLY AGAINST THE PERSON FROM WHOSE PR EMISES THE DOCUMENTS ARE FOUND AND NOT AGAINST THE PERSON WHOS E NAME APPEARS IN THE SEIZED PAPERS. HE FURTHER SUBMITTED THAT A SIMILAR VIEW HAS BEEN TAKEN IN MAHAVIR PROPERTIES VS ACIT ( 2018) 89 TAXMANN.COM 444. (C) LD AO TRIED TO MATCH THE ENTRIES WITH THE CASH DEPOSITS BY PATIDAR FAMILY. NOWHERE IT WAS STATED THAT PATIDAR AGREED THAT THE DEPOSITS IN HIS BANK ACCOUNT WERE OUT OF MONEY GIVE N BY ASSESSEE- COMPANY. THOSE ENTRIES ARE UNRELATED AND CANNOT BE USED AS AN EVIDENCE AGAINST THE ASSESSEE. NO ADDITION FOR THOS E ENTRIES HAVE BEEN MADE. STATEMENT OF PATIDAR WAS NOT RECORDED TO THE BEST OF KNOWLEDGE OF ASSESSEE. HIS STATEMENT WAS NEVER BROU GHT ON RECORD, IF ANY. THE SOURCE OF DEPOSIT BY PATIDAR CAN BE EXPLAI NED ONLY BY PATIDAR. LD. AO CHOOSE NOT TO ENQUIRE THE FACTS FRO M ANY OF THE SELLERS. THE LD. AO ADDED BOTH DEBIT AND CREDIT. A DDITION FOR BOTH, IN ANY CASE, WAS TOTALLY WRONG AND UNCALLED FOR, IN AN Y CASE. THUS, ON SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 72 SUCH LOOSE JOTTINGS BY THIRD PERSON, WHICH WERE NOT FOUND FROM ASSESSEE'S PREMISES, CANNOT BE USED AGAINST THE ASS ESSEE. 53. IN LIGHT OF THE VARIOUS JUDGMENTS REFERRED ABOV E AND EXAMINING THE FACTS, WE FIND THAT THE ALLEGED DIARY WAS NOT F OUND DURING THE COURSE OF SEARCH AT THE ASSESSEES PREMISES AND THE ALLEGED DOCUMENT I.E. DIARY BS-1 UNDOUBTEDLY RELATES TO A T HIRD PARTY I.E. FORTUNE GROUP IN WHICH CERTAIN TRANSACTIONS ARE MEN TIONED WHICH ARE NOT OWNED BY THE ASSESSEE. IT IS ALSO NOT DISP UTED THAT THE ALLEGED DIARY BS-1 WAS FOUND AT THE PREMISES OF EMP LOYEE OF FORTUNE GROUP AND IS PREPARED BY EMPLOYEE OF FORTUNE GROUP AND IS HAVING NO CONNECTION WITH THE ASSESSEE COMPANY. LD. A.O HA S TRIED TO PROVE THE CONNECTION BETWEEN THE TRANSACTIONS APPEARING I N THE DETAILS OF M/S. SOUMYA HOUSING PVT. LTD APPEARING IN THE DIARY WITH CERTAIN TRANSACTIONS ABOUT SOME PURCHASE OF LAND FROM ONE P ATIDAR FAMILY. VARIOUS DETAILS OF CASH DEPOSITS AND BANK ENTRIES H AVE BEEN MENTIONED BY THE LD. A.O IN HIS ORDER WHICH ARE THE TRANSACTIONS BETWEEN THE FORTUNE GROUP AND PATIDAR FAMILY WHICH INCLUDES MANY PERSONS NAMELY SHRI RAVIKANT PATIDAR, MS. VIDYA PA TIDAR, SHRI SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 73 SHASHIKANT PATIDAR AND SHRI GOVIND PATIDAR AND OTHE RS. LD. A.O ALSO REFERRED TO LPS-6/FS3 HAVING PAGE 1TO 105 WHIC H WERE FOUND FROM M/S. FORTUNE BUILDERS WHICH PERTAINS TO SOME S ALE DEED OF AGRICULTURE LAND HAVING TRANSACTIONS WITH SMT. SHAN TI DEVI DAGA, SHRI SHIVKISHAN DAGA, SMT. NEETA MOHGAONKAR AND SOM E PAYMENTS MADE TO SHRI ASHOK PALOD. HOWEVER THERE IS NO MENT ION OF THE ASSESSEE COMPANY NAME IN EACH OF THE TRANSACTIONS. NOW THE MAIN QUESTION BEFORE US IS THAT WHETHER THE ADDITION MAD E BY LD. A.O ON THE BASIS OF SUCH DOCUMENTS FOUND AT SOME OTHER ASS ESSEES EMPLOYEES PLACE CAN BE FORMED AS A BASIS FOR MAKING THE ADDITIONS IN THE HANDS OF THE ASSESSEE. TO ADJUDICATE THIS ISSU E WE HAVE TO FIRST GO THROUGH THE FOLLOWING FACTS; (A) ASSESSEE HAS DENIED TO HAVE ANY CONNECTION/RELA TION TO SUCH ENTRIES MENTIONED IN THE ALLEGED SHOW CAUSE NOTICE. (B) LD. A.O HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO CORROBORATE THE ALLEGED ENTRIES WITH THE BOOKS OF A CCOUNTS MAINTAINED BY THE ASSESSEE OR WITH ANY DOCUMENT FOU ND DURING THE COURSE OF SEARCH. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 74 (C) ALLEGED DIARY BS-1 WAS PREPARED BY EMPLOYEE OF FORTUNE GROUP AND WAS IN THE HANDWRITING OF THE EMPLOYEE. (D) NO REFERENCE WAS PROVIDED IN THE SHOW CAUSE NOT ICE AS TO HOW THE GENUINENESS OF THE DIARY ITSELF AND TRANSAC TIONS MENTIONED IN THE DIARY WERE ESTABLISHED. (E) CAN THE ALLEGED DIARY BE TREATED AS PART OF REG ULAR ACCOUNTS AS THE ENTRIES HAVE NOT BEEN MADE ON DAY T O DAY BUSINESS AND IN DUE COURSE OF BUSINESS. (F) THERE IS NO MENTION IN THE SHOW CAUSE NOTICE A S TO WHETHER FORTUNE BUILDERS, BHOPAL HAVE ADMITTED THE CORRECTNESS OF THE DIARY. (G) IT IS ALSO BROUGHT TO OUR NOTICE THAT BASED ON THE SURVEY AT FORTUNE GROUP, SURRENDER OF INCOME HAS BEEN MADE AN D WHETHER ANY SUCH SURRENDER OR ADDITION HAS BEEN MAD E ON ACCOUNT OF ALLEGED DIARY NAMELY BS-1 IS NOT PLACED ON RECORD. (H) NO OPPORTUNITY OF CROSS EXAMINATION HAS BEEN P ROVIDED TO THE ASSESSEE TO QUESTION THE SURVEYED PERSON AND OT HERS SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 75 CONNECTED WITNESS TO UNEARTH THE TRUTH. 54. GOING THROUGH THE ABOVE FACTS, ONE GLARING FACT IS THAT THE ASSESSEE WAS NOT PROVIDED ANY OPPORTUNITY OF CROSS EXAMINING THE PERSONS WHO POSSESSED THE ALLEGED DIARY WHEREIN CER TAIN TRANSACTIONS WERE MENTIONED UNDER THE HEADING OF AS SESSEES NAME. IT IS PURELY VIOLATION OF PRINCIPLE OF NATURAL JUST ICE AS THE LD. A.O HAS NOT GRANTED THE OPPORTUNITY FOR EXAMINATION TO THE ASSESSEE EVEN AFTER THE REQUEST OF THE ASSESSEE AND IN SUCH CIRCU MSTANCES, WE ARE INCLINED TO REFER TO THE JUDGMENT OF HONBLE APEX C OURT IN THE CASE OF CIT V/S SUNITA DHADHHA SLP(CIVIL) NO.94392/2018 DAT ED 20.03.2018 WHEREIN THE HONBLE APEX COURT DISMISSED THE SLP FILED BY THE REVENUE HOLDING THAT NO INTERFERENCE IS CALL ED FOR IN THE ORDER OF HONBLE HIGH COURT OF RAJASTHAN IN ITA NO.197/20 12 AND OTHERS DATED 31.07.2017 WHEREIN HONBLE HIGH COURT CONFIRM ED THE FINDING OF THE CO-ORDINATE BENCH, JAIPUR VIDE ITA NO. 852/J P/2011 ORDER DATED 30.12.2011 WHICH HELD THAT IF THE LD. AO WAN TS TO RELY UPON THE DOCUMENTS FOUND WITH THIRD PARTIES THE PRESUMPT ION U/S 292C OF THE ACT AGAINST THE ASSESSEE IS NOT AVALABLE. AS P ER THE PRINCIPLE OF SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 76 NATURAL JUSTICE THE LD. A.O HAS TO PROVIDE THE EVID ENCE TO THE ASSESSEE AND GRANT OPPORTUNITY OF CROSS EXAMINATION . SECONDLY EVIDENCE CANNOT BE RELIED ON IF NEITHER A PERSON WH O PREPARED THE DOCUMENT NOR THE WITNESSES ARE PRODUCED. THE VIOL ATION OF PRINCIPLE OF NATURAL JUSTICE RENDERS THE ASSESSMENT VOID. TH E DEPARTMENT CANNOT BE GIVEN A SECOND CHANCE. THE CO-ORDINATE B ENCH, JAIPUR HELD THE ISSUE IN FAVOUR OF THE APPELLANT AFTER REL YING ON VARIOUS JUDGMENTS OBSERVING AS FOLLOWS; 2.20 WE HAVE HEARD BOTH THE PARTIES. THE SEARCH IN THE CASE OF M/S. UNIQUE GROUP WAS CONDUCTED IN THE MONTH OF JAN. 200 9. THE LOOSE PAPERS FOUND AT THE TIME OF SEARCH WERE CONFRONTED TO THE PERSONS IN WHOSE PREMISES SEARCHES WERE MADE. THE AO FOR THE FIRST T IME ISSUED A LETTER DATED 21-09-2010 VIDE WHICH HE SOUGHT INFORMATION U /S 133(6) IN THE CASE OF M/S. MILESTONE DWELLERS PVT. LTD . THE ASSESSEE FILED THE RELY VIDE LETTER DATED 29 TH SEPT. 2010 AND COPY OF THIS LETTER IS AVAILABLE AT PAGES 35 TO 37 OF THE PAPER BOOK. VIDE THIS LETTER, THE ASSESSEE S TATED THAT SHE HAS NEVER RECEIVED THE AMOUNT OF RS. 4.07 CRORES IN CASH. IT WAS FURTHER SUBMITTED IN THE LETTER THAT SHE IS NOT AWARE AS TO HOW SHRI RAV INDER SINGH THAKKAR, DIRECTOR OF M/S. MILESTONE DWELLERS PVT. LTD. HAS S TATED TO HAVE PAID A SUM OF RS. 4.07 CRORES. SHE REQUESTED THE AO TO KINDLY PROVIDE THE COPY OF THE STATEMENT OF SHRI RAVINDER SINGH THAKKAR AND ALSO R EQUESTED TO PROVIDE. THE CROSS EXAMINATION OF SHRI RAVINDER SINGH THAKKA R. ALONGWITH THIS LETTER, HE SUBMITTED THE COPIES OF THE BANK ACCOUNT AS DESI RED. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE FOR THE FIRST SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 77 TIME ISSUED A LETTER DATED 3-12-2010. THE AO IN HIS ORDER HAS MENTIONED THAT IN THE LETTER DATED 3 RD DEC. 2010, THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY A SUM OF RS. 4.07 CRORES IN RESPECT OF RE CEIPT OF 'ON MONEY' BE NOT ADDED TO HER INCOME FOR THE ASSESSMENT YEAR 2008-09 . IN THE WRITTEN SUBMISSION, THE ID. AR SUBMITTED THAT THE ASSESSEE RECEIVED A LETTER DATED 16-12-2010 AND FILED REPLY VIDE LETTER DATED 20-12- 2010. VIDE THIS LETTER, THE ASSESSEE INFORMED THE AO THAT SHE HAS NOT RECEIVED LETTER DATED 3-12-2010 AND REQUESTED THAT COPY OF THIS LETTER ALONGWITH AN NEXURES BE PROVIDED TO HER. THE ASSESSEE FILED REPLY VIDE LETTER DATED 23- 12-2010 AND COPY OF THAT LETTER ALONGWITH ANNEXURE IS AVAILABLE AT PAGES 55 TO 79 OF THE PAPER BOOK. THIS REPLY WAS FILED AFTER GETTING COPY OF LETTER D ATED 3-12-2010 ALONGWITH ANNEXURES. VIDE THIS LETTER, AO WAS INFORMED ABOUT THE COPIES OF THE SALE DEED OF LANDS SITUATED IN VILLAGE MAHAPURA WHICH SH OWED THAT THE LAND WAS NOT BEING SOLD ABOUTRS. 1.00 CRORE PER HECTARE. VID E THIS LETTER, IT WAS STATED THAT SHRI RAVINDER SINGH THAKKAR HAS MADE A HUGE WI NDFALL IN GETTING THE LAND WITHOUT INVESTING HIS SHARE IN M/S. MILESTONE DWELLERS PVT. LTD . HE FABRICATED THE DOCUMENT TO SHOW THAT HE HAS PUT THE CASH FROM HIS SIDE TOWARDS LAND PURCHASE AND TOWARDS LIAISON WITH THE GOVT. OFFICIALS FOR GIVING LAND CONVERSION AND PERMISSION. THE ASSESSEE REQUIRED THE AO TO ASCERTAIN FROM THE OFFICIALS M/S. MILESTONE DWELLER S PVT. LTD. AS TO WHETHER ANY CASH WAS PAID. VIDE THIS LETTER, THE ASSESSEE M ADE REQUEST THAT THE COPY OF THE ENTIRE STATEMENTS SHOULD BE GIVEN AND A N OPPORTUNITY OF CROSS EXAMINATION OF SHRI RAVINDER SINGH THAKKAR BE GIVEN . M/S. MILESTONE DWELLERS PVT. LTD. IS A JOINT VENTURE OF MILESTONE REAL ESTATE FUND AND M/S. UNIQUE DREAM BUILDERS CONTRIBUTION IN M/S. MILESTON E REAL ESTATE FUND HAS BEEN CONTRIBUTED BY PROMIMANT PEOPLE OF INDIA/ MUMB AI FOR REAL ESTATE INVESTMENTS. ACCORDING TO THE ASSESSEE, SHRI RAVIND ER SINGH THAKKAR IN ORDER TO JUSTIFY HIS SHARE OF INVESTMENT FROM HIS S IDE COOKE A STORY OF SPENDING THE CASH SO THAT HE CAN GET THE MAXIMUM BE NEFIT WITHOUT BRINGING SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 78 HIS SHARE OF FUNDS. THUS THE ASSESSEE REQUESTED TO CROSS EXAMINE SHRI RAVINDER SINGH THAKKAR, SHRI AJIT SINGH AND EMPLOYE ES OF MILESTONE REAL ESTATE FUND. THE AO HAS PASSED THE ASSESSMENT ORDER ON 29-12-2010. THE ASSESSEE VIDE LETTER DATED 23-12-2010 REQUESTED THE AO TO ALLOW HER TO EXAMINE SHRI AJIT SINGH, RAVINDER SINGH THAKKAR AND EMPLOYEES OF M/S. MILESTONE REAL ESTATE FUND BEFORE ANY ADVERSE INFER ENCE IS TAKEN: AS PER PRINCIPLE OF NATURAL JUSTICE, IT WAS OBLIGATORY ON THE PART OF THE AO TO HAVE PROVIDED ALL THE MATERIALS WHICH WERE BEING USED AG AINST HER. IN CASE THE AO WAS RELYING ON THE STATEMENT OF A PERSON THEN TH E ASSESSEE WILL HAVE TO BE GIVEN AN OPPORTUNITY TO CROSS EXAMINE. MOREOVER, IN CASE THE AO WANTS TO MAKE RELIANCE FOR MAKING ADDITION ON THE BASIS OF T HE DOCUMENTS FOUND DURING THE COURSE OF SEARCH AT 3 RD PARTY THEN PRESUMPTION U/S 292C WILL NOT BE AVAILABLE AGAINST THE ASSESSEE. SUCH PRESUMPTION , EVEN IN THE CASE OF THE ASSESSEE IN WHOSE CASE THE DOCUMENT HAS BEEN FO UND DURING THE COURSE SEARCH, IS REBUTTABLE. RELIANCE IS PLACED ON THE DE CISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. S. M.S. INVESTMENT CORPORATION LTD., 207 ITR 364. WHILE RECORDING THE STATEMENT OF SHRI RAVINDER SINGH THAKKAR AT THE TIME OF RAID, HE WAS CONFRONTED WITH PAGES 75 TO 78 OF THE PAPER AND PAGES 50 TO 52 OF ANNEXUR E A-24. HOWEVER, THE AO IN HIS ORDER HAS MENTIONED 'ONLY TO THE FUND FLO W STATEMENTS AND COPY OF SUCH FUND FLOW STATEMENTS WAS GIVEN TO THE ASSESSEE . IN THE STATEMENT, SHRI RAVINDER SINGH THAKKAR WAS ASKED TO EXPLAIN AS TO W HY, THE ENTRY OF RS. 5.65 CRORES IS NOT REFLECTED IN THE ASSETS AND LIAB ILITIES OF M/S. MILESTONE DWELLERS (P) LTD. ACCORDING TO SHRI RAVINDER SINGH THAKKAR, THERE IS DIFFERENCE BETWEEN TWO BALANCE SHEETS AND THE DIFFE RENCE IS TO THE EXTENT OF RS. 5.65 CRORES I.E. THE AMOUNT INVESTED IN CASH. W E ARE NOT HAVING THE BENEFIT OF GOING THROUGH ALL THE PAPERS MENTIONED I N THE STATEMENT RELATING TO' SUCH .ISSUE AS THESE HAVE NOT BEEN PROVIDED TO THE' ASSESSEE EXCEPT FUND FLOW STATEMENT. THUS WE FED THAT THE ASSESSMENT ORD ER HAS BEEN PASSED IN SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 79 VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. WE HAD C ONSIDERED THE SIMILAR ISSUES IN THE CASE OF SMT. VIJAY LAXMI DHADDA, IN THAT CAS E ALSO, THE PRINCIPLE OF NATURAL JUSTICE WAS VIOLATED AND THE RELIANCE WAS P LACED ON DOCUMENTS FOUND AT THE SEARCH OF THIRD PARTY. IT WILL BE USEF UL TO REPRODUCE THE FOLLOWING PARAS FROM THAT ORDER. '2.17 THE REVENUE AUTHORITIES RECORDED THE STATEMEN T OF SHRI RAVINDER SINGH THAKKAR, A PERSON BELONGING TO M/S. UNIQUE GR OUP ON DIFFERENT DATES FROM 28-01-2009. THE REVENUE AUTHORITIES PROVIDED O NLY PAGE 4 OF HIS STATEMENT RECORDED ON 28-01-2009. THE RELEVANT PORT ION OF STATEMENT OF SHRI RAVINDER SINGH THAKKAR IS AVAILABLE AT PAGES 40 TO 42 0 THE PAPER BOOK. IN RESPECT OF THE DOCUMENT FOUND -IN THE LOCKER, SHRI RAVINDER SINGH THAKKAR EXPLAINED THE TRANSACTIONS WITH THE ASSESSEE AND HE R HUSBAND. SHRI RAVINDER SINGH THAKKAR HAS CLEARLY MENTIONED THAT H E NEGOTIATED THE DEAL WITH THE ASSESSEE AND HER HUSBAND BUT THE DEAL COUL D NOT MATURE AND THEREFORE, HE RECEIVED BACK THE CHEQUES WHICH WERE ISSUED. THUS SHRI RAVINDER SINGH THAKKAR HAS NOT ADINITTED OF MAKING THE PAYMENT IN CASH. THE CONTENTION OF THE REVENUE THAT SHRI AJIT SINGH THAKKAR HAS ADMITTED THESE UNACCOUNTED PAYMENTS AND INCLUDED IN THE CALC ULATION WHILE WORKING OUT THE ADDITIONAL UNACCOUNTED INCOME OFFERED FOR T AXATION IN THE RETURN OF INCOME SO FILED. IT IS THE CONTENTION OF THE ASSESS EE THAT HE HAS NOT BEEN PROVIDED THE COPY OF THE DOCUMENTS ON WHICH REVENUE IS PLACING RELIANCE INCLUDING THE ADMISSION OF SHRI AJIT SINGH THAKKAR IN THE RETURN OF INCOME. THE HON'BLE APEX COURT IN THE CASE OF KANWAR NATWAR SINGH V. DIRECTORATE OF ENFORCEMENT, 3~O ITR 374 HELD THAT RIGHT TO FAIR HEARING IS A GUARANTEED RIGHT. HOWEVER, THE PERSON HAS A RIGHT TO KNOW THE EVIDENCE TO BE USED AGAINST HIM. THE SUPPLY OF MATERIAL RELIED UPON BY THE AUTHORITIES ON THE BASIS OF WHICH THE LAW HAS BEEN SET INTO MOTION ARE TO BE GIVEN AS PER REQUIREMENT OF NATURAL JUSTICE. IN THAT CASE, THE H ON'BLE APEX COURT DIRECTED SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 80 THE AUTHORITIES TO PROVIDE ALL THE DOCUMENTS ON WHI CH RELIANCE HAS BEEN PLACED. IN THE INSTANT CASE, SHRI RAVINDER SINGH TH AKKAR HAS NOT GIVEN ANY ADVERSE STATEMENT. IN CASE THE REVENUE WANTED TO RE LY ON THE UNACOUNTED INCOME OFFERED BY SHRI AJIT SINGH THAKKAR THEN THE ASSESSEE SHOULD HAVE BEEN PROVIDED AN OPPORTUNITY OF NOT ONLY SEEING THE DOCUMENT BUT ALSO CROSS EXAMINATION. THE THIRD MEMBER DECISION IN THE CASE OF KAWIN INTERNACTIVE (P) LTD. , 133 ITD 29 UPHELD THE FINDINGS OF THE ID . CIT(A) IN DELETING THE ADDITION BECAUSE THE AO RELIED UPON UNCOMPARBALE CA SES AND HAS NOT PROVIDED THE OPPORTUNITY TO THE ASSESSEE OF BEING H EARD. THE THIRD MEMBER HAD AN OCCASION TO CONSIDER THE ISSUE OF MAKING AN ADDITION MERELY ON THE BASIS OF EVIDENCE PROCURED FROM THIRD PARTY IN THE CASE OF ITO VS. MAYUR AGARWAL, 128 ITD 55. IT WAS HELD THAT NO ADDITION C AN BE MADE MERELY ON THE BASIS OF EVIDENCE PROCURED FROM THIRD PARTY WHE N THE ASSESSEE DENIED TRANSACTIONS UNLESS SUCH PARTY TO BE PUT UP FOR CRO SS EXAMINATION. 2.19 WE HAD NOTICED THAT SEARCH OPERATIONS WERE CAR RIED OUT IN THE CASE OF M/S. UNIQUE GROUP ON 28-01-2009. THE STATEM ENT OF THE HUSBAND OF THE ASSESSEE WAS RECORDED ON 4-03-2009 AND THE STAT EMENT OF THE ASSESSEE WAS RECORDED ON 16-03-2009. WE ARE NOT AWARE AS TO WHEN SHRI AJIT SINGH THAKKAR, FATHER OF THE ASSESSEE SHRI RAVINDER SINGH THAKKAR ADMITTED SUCH UNACCOUNTED PAYMENT AND INCLUDED IN THE CALCULATION WHILE WORKING OUT THE ADDITIONAL UNACCOUNTED INCOME OFFERED FOR TAXATION IN THE RETURN OF INCOME SO FILED. THE ASSESSEE WAS GIVEN SHOW CAUSE NOTICE ALONGWITH ANNEXURE ON 16-12-2010. THE ASSESSMENT HAS BEEN COMPLETED VIDE ORDER DATED 29-12- 2010. HENCE ALL THE PROCEEDINGS HAVE BEEN CONCLUDED WITHIN A FORTNIGHT OF ISSUANCE OF SHOW CAUSE NOTICE. THE SEARCH WAS CONDU CTED IN JAN. 2009 AND THE STATEMENT 'OF THE ASSESSEE WAS RECORDED IN MARC H 2009. AFTER RECEIPT OF THE SHOW CAUSE NOTICE, THE ASSESSEE REQUIRED THE AO TO PROVIDE HIM STATEMENT OF COMPUTATION OF INCOME FILED BY SHRI AJ IT SINGH THAKKAR. AFTER SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 81 GETTING THE COPIES, THE ASSESSEE SHOULD HAVE ASKED FOR CROSS EXAMINATION OF SHRI AJIT SINGH THAKKAR . THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF HEIRS AND LEGAL REPRESENTATIVES OF LATE LAXRNANBHAI S. PATEL VS. CIT, 327 ITR 290 HAD OCCASION TO CONSIDER THE ADDITION IN TH E HANDS OF A PERSON WHO HAS SIGNED THE PROMISSORY NOTE WHICH WAS FOUND DURI NG THE COURSE OF SEARCH AT THE PRERMSES OF THE FIRM IN WHICH THIRD P ARTY WAS PARTNER AND THE FIRM DISCLOSED SUCH UNACCOUNTED INCOME. THE HON'BLE HIGH COURT HELD THAT THE AMOUNT COVERED OF PROMISSORY NOTE COULD NOT BE ASSESSED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AS THE ASSESS EE WAS NOT GIVEN AN OPPORTUNITY OF CROSS EXAMINATION THE THIRD PARTY IN WHOSE SEARCH , PROMISSORY NOTE WAS FOUND. IT WILL BE USEFUL TO REP RODUCE THE HELD PORTION FROM THIS DECISION. '(II) THAT EXCEPT THE STATEMENTS OF K AND R THERE W AS NO OTHER EVIDENCE AVAILABLE WITH THE DEPARTMENT. A COPY OF T HE STATEMENT OF R WAS NOT GIVEN NOR WAS AN OPPORTUNITY OF CROSS-EXAMINING R GIVEN TO THE ASSESSEE. K HAD SUBSEQUENTLY RETRACTED HIS STATEMEN T. EVEN AFTER RETRACTION, HE ALONG WITH TWO OTHER PARTNERS HAD FILED DISCLOSU RE PETITION DISCLOSING THIS VERY AMOUNT IN THE DISCLOSURE PETITION. THE ASSESSE E'S STATEMENT WAS RECORDED BY THE ASSESSING OFFICER AND SOME DISCREPA NCIES WERE POINTED OUT BUT MERELY ON THE BASIS OF SUCH. DISCREPANCIES, ADV ERSE PRESUMPTIONS COULD NOT BE DRAWN AGAINST HIM. THE DEPARTMENT HAD FAILED TO ESTABLISH ANY NEXUS BETWEEN THE PROMISSORY NOTE AND THE AMOUNT SA ID TO HAVE BEEN GIVEN BY THE ASSESSEE TO K. THE TRIBUNAL WAS NOT RIGHT IN LAW IN UPHOLDING THE ADDITION OF RS. 8,78,358 IN THE HANDS OF THE ASSESS EE.' 2.20 THE HON'BLE APEX COURT IN THE CASE OF RAJESH _ KUMAR V. DCIT' , 287 ITR 91 HELD THAT PRINCIPLE OF NATURAL JUSTICE S HOULD BE FOLLOWED IN THE CASE WHERE A PERSON SUFFERS CIVIL CONSEQUENCES THOU GH THE PRINCIPLE OF NATURAL JUSTICE IS NOT IMPLIEDLY MENTIONED, BY PASS ING OF ASSESSMENT ORDER SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 82 AND CREATING A DEMAND, THERE ARE CIVIL CONSEQUENCES AND THE AO SHOULD HAVE PROVIDED AN OPPORTUNITY. THE HON'BLE APEX COUR T IN THE CASE OF KISHINCHAND CHELLARAM V. CIT, 125 ITR 713 HELD THAT IF AN EVIDENCE TO BE USED AGAINST THE ASSESSEE IS NOT SHOWN TO HIM THEN SUCH EVIDENCE IS NOT ADMISSIBLE. IN THIS CASE, HON'BLE APEX COURT HELD T HAT THE DEPARTMENT OUGHT TO HAVE CALLED UPON THE BANK MANGER TO PRODUCE THE DOCUMENTS AND PAPERS ON THE BASIS OF WHICH HE HAS MADE THE STATEMENT AND CONFRONTED THE ASSESSEE WITH THOSE DOCUMENTS AND PAPERS. THE HON'B LE APEX COURT IN THE CASE OF CIT VS. BOKARO STEEL LTD. 236 ITR 135 HAD AN OCCASION THE ISSUE OF ACCRUAL OF INCOME AND PRINCIPLE OF REAL INCOME. IN THIS CASE, THE ORIGINAL AGREEMENT SEIZED TO BE OPERATIVE ABINITO AND REVERS AL OF ENTRIES WERE THERE IN THE ACCOUNT BOOKS. THE ASSESSEE DID NOT RECEIVE ANY REAL INCOME. IN THE INSTANT CASE, THE ASSESSEE IN HIS STATEMENT IN THE MONTH OF MARCH, 2009 CLEARLY STATED THAT THE AMOUNTS WERE NOT RECEIVED A ND CHEQUES WERE RETURNED BACK. SUCH FACTS IS SUPPORTED FROM THE STA TEMENT OF SHRI RAVINDER SINGH THAKKAR MADE ULS 132 (4) OF THE ACT AT THE TI ME OF SEARCH. THE CONCEPT OF REAL INCOME WAS AGAIN REITERATED BY THE HON'BLE APEX COURT IN THE CASE OF GODHRA ELECTRICITY CO. LTD. VS. CIT, 225 ITR 746. T HE HON'BLE APEX COURT IN THE CASE OF CIT VS. DAULATRAM RAWATMULL , 87 ITR 34 9 OBSERVED THAT THERE SHOULD BE NECESSITY OF NEXUS BETWEEN THE CONCLUSION AND PRIMARY FACTS. THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT HE RECEIVED CHEQUES AND THE SAME WERE RETURNED BECAUSE THE DEAL COULD NOT MATERIALIZ E. THE REVENUE IS RELYING ON THE DISCLOSURE OF INCOME BY SHRI AJIT SINGH THAK KAR FATHER OF SHRI RAVINDER SINGH THAKKAR. THUS THE PRIMARY FACTS ARE NOT CONFRONTED TO HOLD THAT THE ASSESSEE CAN BE CHARGED WITH UNDISCLOSED INCOME. THE HON'BLE APEX COURT IN THE CASE OF PARIMISETTI SEETHARAMARNM A VS. CIT 57 ITR 532 HELD THAT THE CASE IN WHICH THE RECEIPT IS SOUGHT T O BE TAXED AS INCOME THEN BURDEN IS UPON THE DEPARTMENT TO PROVE THAT IT IS W ITHIN THE TAXING PROVISIONS. THE AO IN HIS ORDER HAS NOT MENTIONED A NY SECTION UNDER WHICH SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 83 HE HAS TAXED THE RECEIPT. THE HON'BLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS. S.C. SETHI, 295 ITR 351 HAD AN OCCASION TO CONSIDER THE CASE IN WHICH THE ADDITION WAS MADE ON THE BASIS OF ENTRIES OF. LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH, NO OPPORTUNITY WAS GIV EN TO THE ASSESSEE OF CROSS EXAMINATION OF THE PERSON FROM WHOSE POSSESSI ON LOOSE PAPERS WERE RECOVERED. THE HON'BLE JURISDICTIONAL HIGH COURT TH EREFORE, UPHELD THE FINDINGS OF THE TRIBUNAL IN DELETING THE ADDITION. THE HON'BLE JURISDICTIONAL HIGH COURT ALSO NOTICED THAT REVENUE IN THIS CASE D ID NOT FILE ANY APPEAL AGAINST THE ORDER OF THE TRIBUNAL FOR THE SUBSEQUEN T ASSESSMENT YEAR ON THE SAME FACTS. IN THIS CASE, WE DO NOT FEEL THAT SECON D INNING BE GIVEN OF THE DEPARTMENT. THE REVENUE WAS HAVING SUFFICIENT TIME TO CONFRONT WITH THE ASSESSEE WITH THE EVIDENCE WHICH IT WANTED TO RELY. EYEN UPTO FIRST APPELLATE ,STAGE, THE ASSESSEE WAS NOT CONFRONTED W ITH, ALL THE EVIDENCES ON WHICH THE REVENUE IS PLACING RELIANCE AND DRAWING I NFERENCE AGAINST THE ASSESSEE. ITA T AHEMDABAD BENCH IN THE CASE OF SHET H AKSHAY PUSHPAVADAN VS. DCIT, 130 TTJ 42 HELD THAT PRESUMPT ION U/S 132(4A) CANNOT BE INVOKED AGAINST THE ASSESSEE IN A CASE WH EN THE SEIZED PAPER WAS NOT RECOVERED DURING THE COURSE OF SEARCH FROM THE POSSESSION OF THE ASSESSEE. IN THIS CASE, THE DOCUMENTS WHICH ARE BEI NG RELIED UPON BY THE REVENUE WERE FOUND DURING THE COURSE OF SEARCH OF T HIRD PARTY. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ASHWANI GUP TA, 191 TAXMAN 51 CONFIRMED THE ORDER OF THE ID. CIT(A) IN WHICH THE ID. CIT(A) CANCELLED THE ORDER BECAUSE THERE WAS VIOLATION OF PRINCIPLE OF N ATURAL JUSTICE. IN THIS CASE, THE ASSESSEE WAS NEITHER PROVIDED COPIES OF SEIZED MATERIALS NOR HE WAS ALLOWED TO CROSS EXAMINE THE PERSON ON THE BASIS OF WHOSE STATEMENT, THE ADDITION WAS MADE. THE ITAT JAIPUR BENCH IN THE CAS E OF ITO VS. SHRI PREM CHAND NARANG (ITA NO. 1183/ JP/2010 DATED 11-02-201 1) HAD AN OCCASION TO CONSIDER THE PRESUMPTION AS CONTAINED IN SECTION 292C OF THE ACT. IT WILL BE USEFUL TO REPRODUCE FOLLOWING PARA FROM THAT ORD ER. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 84 '2.7 SECTION 292C REFERS TO THE PRESUMPTION IN RESP ECT OF BOOKS OF ACCOUNT AND DOCUMENTS FOUND IN THE POSSESSION AND C ONTROL OF ANY PERSON IN THE COURSE OF SURVEY U/S 133A OF THE ACT. THE PR ESUMPTION WHICH MAY BE MADE FOR ANY PROCEEDINGS UNDER THE ACT AREAS UNDER: - '(I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SU CH BOOKS OF, ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HA NDWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUME D TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PART ICULAR PERSON, ARE IN THAT PERSON'S HANDWRITING, AND IN THE CASE OF A DOC UMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED.]' 2.8 SECTION USES THE WORD 'MAY'. THE WORD 'MAY' LEA VE IT TO THE COURT TO MAKE OR NOT TO MAKE PRESUMPTION ACCORDING TO THE CIRCUMSTANCES OF THE CASE. SUCH PRESUMPTION IS OPTIONAL AND THE COURT IS NOT BOUND TO MAKE IT. SECTION HAS NOT CONTAINED THE WORD 'SHALL PRESUME'. SIMILAR WORDING OF 'MAY PRESUME' IS CONTAINED IN SECTION 132(4A) OF THE ACT . THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SMS INVESTMENT CORPORA TION (P) LTD, 207 ITR 364 HAS HELD THAT PRESUMPTION IS REBUTTABLE. IN THA T CASE, SEIZED PAPER SHOWED THE CALCULATION OF COMPOUNDING INTEREST WHIL E AGREEMENT WAS IN RESPECT OF RECEIVING THE SIMPLE INTEREST. THE HON'B LE HIGH COURT HELD THAT SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 85 PRESUMPTION IN SECTION 132(4A) IS REBUTTABLE. IN VI EW OF THE FACTUAL POSITION, THE REOPENING OF THE ASSESSMENT WAS INVALID ON THE GROUND THAT THE' ASSESSEE HAS RECEIVED COMPOUND INTEREST. THE PRESUM PTION MENTIONED ILL SECTION 132( 4A) IS SIMILAR TO PRESUMPTION U/S 292C OF THE ACT. THE IT AT AHEMDABAD BENCH IN THE CASE OF UNIQUE ORGANIORS AND DEVELOPERS (P) LTD VS. DCIT , 70 TTJ 131 .HELD THAT PRESUMPTION CANNOT BE APPLICABLE TO A THIRD PARTY FROM WHOSE POSSESSION SUCH DOCUMENTS HAVE NOT BEEN FOUND BY THE REVENUE. THE HON'BLE APEX COURT IN THE CASE OF STAT E OF WEST BENGAL VS. EITA INDIA, LTD (2003) 5 SCC 239 HAD AN OCCASION TO CONSIDER THE DISTINCTION BETWEEN THE WORD 'MAY' AND' SHALL PRESU ME' . IN THE CASE OF 'MAY PRESUME' THE FACT IS TO BE CONSIDERED AS PROVED UNL ESS AND UNTIL IT IS DISPROVED OR MAY CALL FOR PROVE OF IT. THE ITAT AHE RNDABD BENCH IN THE CASE OF SHETH AKSHAY PUSHPAVADAN VS. DCIT, 130 TTJ 42 (U O) HELDTHAT PAYMENT OF ON-MONEY ON THE BASIS OF DIARY SEIZED FROM THE T HIRD PARTY CANNOT BE CONSIDERED FOR THE PURPOSE OF MAKING ADDITION U/S 6 9 OF THE ACT. WE THEREFORE, HOLD THAT THE ID. CIT(A) WAS JUSTIFIED I N DELETING THE ADDITION. THE ID. CIT(A) HAS ALSO CONSIDERED THE ALTERNATE SUBMIS SIONS IN RESPECT OF AVAILABILITY OF FUNDS WITH ALL THE FAMILY MEMBERS O F THE ASSESSEE AND THE ADDITION COULD NOT HAVE BEEN MADE EVEN IF THE ENTRY IN THE DOCUMENT IS TO BE PRESUMED AS CORRECT.' 2.21 FOLLOWING OUR FINDINGS THAT THERE IS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND EVIDENCES NOT ESTABLISHED AGAIN ST THE ASSESSEE AND HENCE THE ID. CIT(A) WAS NOT JUSTIFIED IN CONFIRMIN G THE ADDITION. WE ACCORDINGLY DELETE THE ADDITION. 55. HONBLE APEX COURT IN THE CASE OF RAJIV ARORA V /S UNION OF INDIA & OTHERS 2009 (SC) 1100 HAS HELD THAT EFFECTIVE CROSS EXAMINATION COULD HAVE BEEN DONE AS REGARDS THE COR RECTNESS OR SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 86 OTHERWISE OF THE REPORT, IF CONTENTS OF THEM WERE P ROVED. THE PRINCIPLES ANALOGOUS TO THE PROVISIONS OF THE INDIAN EVIDENCE ACT AS ALSO THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT THE MAKER OF THE REPORT SHOULD BE EXAMINED, SAVE AND EXCEPT IN CASES WHERE THE FACTS ARE NOT AVAILABLE FOR CROSS EXAMINATION OR SIMILAR SITUATIO N. THE HIGH COURT IN ITS IMPUGNED JUDGMENT PROCEEDED TO CONSIDER THE ISS UE ON A TECHNICAL PLEA, NAMELY, NO PREJUDICE HAS BEEN CAUSED TO THE A PPELLANT BY SUCH NON-EXAMINATION. IF THE BASIC PRINCIPLES OF LAW HA VE NOT BEEN COMPLIED WITH OR THERE HAS BEEN A GROSS VIOLATION OF THE PRI NCIPLES OF NATURAL JUSTICE. IN THE ABSENCE OF SUCH AN OPPORTUNITY, IT CANNOT BE HELD THAT THE MATTER HAS BEEN DECIDED IN ACCORDANCE WITH LAW, AS CROSS EXAMINATION IS AN INTEGRAL PART AND PARCEL OF THE P RINCIPLES OF NATURAL JUSTICE. 56. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENTS OF H ONBLE APEX COURT, HIGH COURT OF RAJASTHAN AND CO-ORDINATE BENC H AND VARIOUS DECISIONS REFERRED AND EXAMINING THE FACTS IN THE I NSTANT APPEAL, WE FIND THAT THE ADDITIONS MADE FOR UNACCOUNTED TRANSA CTIONS WITH M/S. FORTUNE GROUP ARE UNCALLED FOR AS THEY ARE MERELY B ASED ON DIARY BS-1 PREPARED BY A THIRD PERSON WHO WAS WORKING WIT H M/S. FORTUNE GROUP AND THE ALLEGED DIARY WAS ALSO FOUND DURING T HE COURSE OF SURVEY AT THE PREMISES OF EMPLOYEE OF FORTUNE GROUP . THE TRANSACTIONS MENTIONED IN ONE OF THE PAGE OF THE DI ARY SHOWS THE SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 87 NAME OF THE ASSESSEE BUT THOSE TRANSACTIONS HAVE BE EN DENIED BY THE ASSESSEE TO HAVE TAKEN PLACE WITH M/S. FORTUNE GROU P. FURTHER THE OTHER TRANSACTIONS OF CASH/CHEQUE WITH PATIDAR FAMI LY AND OTHER DOCUMENTS FOR PURCHASE OF LAND HAVE NO BEARING WITH THE ASSESSEE AS THE NAME OF THE ASSESSEE IS NOT MENTIONED THEREIN. NO INCRIMINATING MATERIAL RELATING TO FORTUNE GROUP WAS FOUND DURING THE COURSE OF SEARCH AT THE ASSESSEES PREMISES. BOTH THE LOWER A UTHORITIES WERE UNABLE TO BRING ANY MATERIAL ON RECORD WHICH COULD PROVE THAT THE ALLEGED TRANSACTIONS APPEARING IN THE DIARY FOUND A T THE BUSINESS PREMISES OF FORTUNE GROUP HAS ANY CONNECTION WITH T HE BUSINESS AS WELL AS BOOKS OF ACCOUNTS REGULARLY MAINTAINED BY T HE ASSESSEE. ABOVE ALL ASSESSEE HAVE NOT BEEN GIVEN ANY OPPORTUN ITY TO CROSS EXAMINATION EVEN AFTER MAKING REPEATED REQUEST. TH US, LD. A.O HAS NOT GRANTED THE OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE WITH THE AUTHOR OF THE ALLEGED DIARY AS WELL AS CON CERNED PERSON OF M/S. FORTUNE GROUP AND THUS THE ACTION OF THE LD. A .O OF NOT PROVIDING CROSS EXAMINATION TURNS OUT TO BE A CLEAR VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND THEREFORE THE ADDI TIONS MADE BY THE LD. A.O FOR THE UNACCOUNTED TRANSACTIONS WITH M/S. FORTUNE GROUP SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 88 HAS NO FOUNDATION TO STAND FOR AND SAME NEEDS TO BE DELETED. HOWEVER IT IS CLARIFIED THAT OUR THIS DECISION BASE D ON THE FACTS OF THE PRESENT CASE CANNOT BE CONSTRUED AS ESTOPPLE TO THE LD.A.O TO REOPEN THE CASE IF HE FINDS LIVE LINK OF ASSESSEE WITH THE TRANSACTIONS MENTIONED AT PAGE-1 OF THE SEIZED DIARY BS-1. WE ACCORDINGLY DELETE THE ADDITION OF RS.5,00,000/ -, RS.7,63,49,000/- AND RS.9,00,000/- FOR ASSESSMENT YEARS 2011-12, 2012-13 AND 2013-14 AND ALLOW THE RELEVANT GROUND NO.6 FOR EACH OF THE THREE YEARS RAISED BY THE ASSESSEE. 57. NOW WE TAKE UP GROUND NO.6,7 & 8 RAISED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2011-12 FOR THE ADDIT ION OF UNACCOUNTED TRANSACTIONS AT RS.46,86,348/- ON THE B ASIS OF LPS-28 PAGE-30, OF RS.10,00,000/- ON THE BASIS OF LPS-4 PA GE 30 AND RS.2,60,000/- ON THE BASIS OF PAGE-21. 58. BRIEF FACTS RELATING TO THESE GROUNDS ARE THAT THE LD. A.O ON THE BASIS OF PAGE-29, LPS-28 SEIZED FROM FS-4 DURING TH E COURSE OF SEARCH PROCEEDINGS OBSERVED FOLLOWING DETAILS WHERE IN NAME OF THE PERSON ALONG WITH THE PLOT NO, AMOUNT AS PER THE SE IZED DOCUMENT AND THE TOTAL AMOUNT IN THE LEDGER ACCOUNT. ON THE STRENGTH OF THIS SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 89 DOCUMENT, LD. A.O AFTER CONSIDERING THE SUBMISSION OF ASSESSEE OBSERVED AS FOLLOWS; DURING THE COURSE OF SEARCH PROCEEDINGS, PAGE-29 O F LPS-28 SEIZED FROM FS-4 CONTAINS NAMES OF THE PERSONS ALONG WITH AMOUN TS. 9.2.3 ALL THESE RECEIPTS AS PER PAPER AND THE AMOUN TS AS PER LEDGER HAVE BEEN TABULATED AS UNDER: NAME FLAT NO. AMOUNT AS PER PAPER (IN RS.) WHETHER THIS AMOUNT MENTIONED THE LEDGER OR NOT TOTAL ACCOUNTED AMOUNT LEDGER (IN RS.) SHRI RAJVEER SINGH 02201 1,07,500/ - NO 8,54,711/ - SHRI SANJAY SINGH 02104 1,0 7,239/ - NO 9,71,656/ - SHRI ROSHAN SINGH NEGI C4104 92,200/ - NO 7,84,400/ - SHRI MANOJIT SHAH 02403 1,38,274/ - NO 13,67,050/ - SHRI K.K. SHARMA 02304 86,832/ - NO 8,99,000/ - SHRI KULBHUSHAN DEVAL 04602 98,500/ - NO 7,90,965/ - SHRI AJAY KASHYAP 04302 5,30, 000/ - NO 9,58,000/ - SHRI SHASHIKANT GUPTA 06302 2,90,000/ - NO 5,89,165/ - SHRI RAVINDRA MALVIYA 18301 32,500/ - NO 2,77,500/ - SHRI RADHAKRISHNANNAIR 06303 11,05,000/ - NO 1,05,000/ - SHRI V.S. BHADURIA 06402 2,68,500/ - NO 8,96,489/ - SHRI M.S. RANA 06403 2 ,43,500/ - NO 2,94,000/ - SHRI SANJEEV SHRIVASTAVA 04403 1,85,055/ - NO 8,53,176/ - SHRI M.K. BHAGAT 04203 2,01,000/ - NO 7,02,000/ - SHRIRASHID SAHAIL 04101 2,19,600/ - NO 8,15,066/ - SHRI SHREEPAD NANDIGRAM 04402 3,55,148/ - NO 9,47,852/ - SHRI SUNNY GEORGE 0 6503 11,59,000/ - NO 7,26,125/ - SHRI RAVI PRAKASH MISHRA 02202 1,13,500/ - NO 9,14,676/ - SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 90 SHRI KISHORE MAHAJAN 18104 11,00,000/ - NO 4,56,221/ - TOTAL 46,86,348/ - 1,42,03,052/ - 9.2.4 ON PERUSAL OF THE ABOVE PAPER/LEDGERS/ TABLE, IT IS CLEAR THAT THE ASSESSEE COMPANY HAS RECEIVED ON MONEY PAYMENTS A MOUNTING TO RS. 46,86,348/- AND THE SAME IS NOT REFLECTED IN ITS BO OKS OF ACCOUNTS. AS THE WHOLE AMOUNT OF RS. 46,86,348/- HAS BEEN RECEIVED O N 30.12.2010, HENCE THE SAME IS ADDED FOR A.Y. 2011-12. 9.3.1 PAGE NO. 3 OF LPS-4/30 SEIZED FROM FS-4, CONT AINS THE PAYMENT OF ATIQUE AHMED TOTALLING OF RS. 91 LACS, PAYMENT TO I NCOME TAX RS. 23 LACS, TDS (FY09-10) RS. 6187 AND RS. 10 LACS TO ANONYMOUS . THUS THE DETAILS OF TOTAL PAYMENT OF RS. 1,24,06,187/- IS REFLECTED. 9.3.2 VIDE QUESTIONNAIRE U/S 142(1) DATED 30.06.201 4 THE ASSESSEE COMPANY WAS ASKED TO EXPLAIN THIS PAPER AND AT THE SAME TIME THE ASSESSEE COMPANY WAS SHOW CAUSE AS WHY THE SAME SHO ULD NO BE ADDED TO ITS INCOME. 9.3.3 VIDE REPLY DATED 05.03.2015, THE ASSESSEE COM PANY SUBMITTED AS UNDER: 'THIS PAPER IS DERIVED FROM POCKET DIARY OF EMPLOYE E AND RECORDS ARE MEMORANDUM OF CERTAIN PAYMENTS MADE DURING F.Y 2010 -11. THE ENTRY OF RS. 10,00,000/- REFERS TO PAYMENT MADE FOR PURCHASE OF LAND. ' 9.3.5 THE CLAIM OF THE ASESSEE HAS BEEN CONSIDERED BUT THE SAME IS NOT ACCEPTABLE. IN FACT ALL THE AMOUNT EXCEPT RS. 10,00 .000/- ARE REFLECTED IN THE BOOKS OF THE ASSESSEE COMPANY. 9.3.6 LIKEWISE AMOUNT WRITTEN AS RS.23 LAKHS AGA INST THE INCOME TAX SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 91 APPEARED IN THE SCHEDULE OF ADVANCE TAX PAYMENT IN THE BOOKS OF THE ASSESSEE COMPANY (FY 2010-11). 9.3.7 THE AMOUNT OF RS.91 LACS SHOWN AGAINST ATIQUE AHMED IS REFLECTED IN THE PAYMENT SCHEDULE. 9.3.8 BUT THE PAYMENT SHOWN AGAINST THE ANONYMOUS O F RS.10 LACS IS NOT A PART OF BOOKS OF ACCOUNT. HENCE THE TOTAL AMOUNT OF RS.10 LACS REMAINS UNEXPLAINED AND THE SAME IS HEREBY ADDED IN THE HAN DS OF THE ASSESSEE COMPANY FOR A.Y. 2011-12. PENALTY PROCEEDINGS U/S 271(1)(C) ARE HEREBY INITI ATED FOR A.Y. 2011-12. 9.4.1 PAGE 21 OF BS-1 CONTAINS RECEIPT OF RS.2.60 L ACS FROM PRATIBHA MISHRA ON 30.01.2012. 9.4.2 VIDE QUESTIONNAIRE U/S 142(1) DATED 30.06.201 4, THE ASSESSEE WAS ASKED TO EXPLAIN THIS PAPER AND AT THE SAME TIME TH E ASSESSEE COMPANY WAS SHOW CAUSE AS WHY THIS AMOUNT SHOULD NOT BE ADD ED TO ITS TOTAL INCOME. VIDE REPLY DATED 05.03.2015 THE ASSESSEE CO MPANY SUBMITTED AS UNDER: 'THE TRANSACTION OF SMT. PRATIBHA MISHRA IS RELATED TO TULIP GREEN PROJECT UNDERTAKEN BY M/S FORTUNE SOUMYA HOUSING WHICH IS A PARTNERSHIP CONCERN. SHE HAS BOOKED PLOT IN THAT SCHEME. HER TR ANSACTION ARE NOT RELATED TO US, ' 9.4.3 THE CLAIM OF THE ASSESSEE IS FACTUALLY INCORR ECT. THE NAME OF SMT. PRATIBHA MISHRA HAS BEEN FOUND IN THE BOOKS OF M/S SOUMYA HOMES PVT. LTD. AND THE RECEIPT OF RS.2,60,000/- IS NOT REFLEC TED IN THAT LEDGER. 9.4.4 ACCORDINGLY AN AMOUNT OF RS.2,60,000/- IS HER EBY ADDED TO THE TOTAL SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 92 INCOME OF THE ASSESSEE COMPANY FOR A.Y. 2011-12 AS THE PAPER MENTIONED ABOVE IS RELATED TO F.Y. 2010-11 I.E. A.Y. 2011-12. 59. SIMILARLY ADDITION WERE MADE BY THE LD. A.O OF RS.10,00,000/- ON THE BASIS OF PAGE-3, LPS-4/30 FOR WANT OF NECESS ARY DETAILS ABOUT THE FIGURE APPEARING IN THE SEIZED DOCUMENT AND ANO THER ADDITION OF RS.2,60,000/- WAS MADE FOR THE UNACCOUNTED RECEIPT FROM SMT. PRATIBHA MISHRA ON 30.1.2012 APPEARING AT PAGE-21 O F BS-1. 60. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED BY THE ASSESSEE THAT THE SUM AT RS.46,86,386/- ALLE GED TO HAVE BEEN RECEIVED TOWARDS ON MONEY FROM VARIOUS PERSONS PU RCHASING THE FLAT FROM THE ASSESSEE, THAT ALL ARE PART OF REGULA R TRANSACTIONS APPEARING IN THE BOOKS OF ACCOUNTS AND THE SAME CAN BE VERIFIED FROM THE LEDGER STATEMENTS. AS REGARDS RS.10,00,00 0/- IT WAS SUBMITTED THAT THIS REFER TO PAYMENT MADE FOR PURCH ASE OF LAND AT KOLAR ROAD PROJECT AND IS DULY REFLECTED IN THE BOO KS. AS REGARDS THE ADDITION OF RS.2,60,000/- AMOUNT RECEIVED FROM SMT. PRATIBHA MISHRA, IT WAS SUBMITTED THAT THE TRANSACTION OF S MT. PRATIBHA MISHRA IS RELATED TO TULIP GREEN PROJECT AND IS PAR T OF REGULAR BOOKS OF ACCOUNTS. HOWEVER, LD. A.O WAS NOT CONVINCED WI TH THESE STATEMENTS AND ADDED AMOUNT OF RS.46,86,386/-, RS.1 0,00,000/- & SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 93 RS.2,60,000/- TO THE INCOME OF THE ASSESSEE. AGGRI EVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) BUT FAILED TO SU CCEED AS ALL THE THREE ADDITIONS OF RS.46,86,386/-, RS.10,00,000/- & RS.2,60,000/- WERE CONFIRMED BY LD. CIT(A) OBSERVING AS FOLLOWS; 9.2 PAGE 39 OF LPS-28 WAS SEIZED DURING THE SEARCH WHICH CONTAINS DETAILS OF RECEIPT APPELLANT OF THE PERSONS MENTION ED ON THE PAGE 39 OF LPS-28. ALL THE PERSONS MENTIONED ON PAGE 39 OF LPS -28 ARE CUSTOMER OF THE APPELLANT'S COMPANY AND NONE OF THE ENTRIES WER E RECONCILED WITH THE LEDGER ACCOUNT OF THESE PERSONS MAINTAINED BY THE A PPELLANT ASSESSEE WHICH CLEARLY SHOWS THAT THESE RECEIPTS ARE UNACCOU NTED OR THE APPELLANT HAS RECEIVED ON MONEY WHICH IS NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNT OF THE APPELLANT ASSESSEE. THUS, THE-ADDITI ON OF RS. 46,86,348/- MADE ON THIS ACCOUNT IS CONFIRMED. 9.3 REGARDING, PAGE 3 OF LPS-4/30 THE PLEA TAKEN BY THE APPELLANT THAT THE ENTRIES DERIVED FROM POCKET DIARY OF EMPLOYEE ARE C ERTAIN PAYMENTS MADE DURING F Y 2010-11 AND THE ENTRY OF RS. 10,00,000/- REFERS TO PAYMENT FOR PURCHASE OF LAND IS DEVOID OF ANY ENTRIES MENTIONED ON PAGE 3 OF LPS-4/30 ARE REFLECTED IN THE BOOKS OF ACCOUNT OF APPELLANT EXCEPT RS.10,00,000/-. THE A.O VIDE QUESTIONNAIRE DATED 30.06.2014 U/S 142 (1) ASKED THE APPELLANT TO RECONCILE THE ABOVE TRANSACTION. THE A PPELLANT ASSESSEE WAS UNABLE TO RECONCILE THE ABOVE TRANSACTION IN THE BO OKS OF ACCOUNT. IF THE AMOUNT OF RS. 10,00,000/- WAS FOR PURCHASE OF LAND, THEN THE DETAILS OF PAYMENTS, PERSON TO WHOM THE AMOUNT WAS PAID, DETAI LS OF LAND PURCHASED ETC. WERE NOT FILED BY THE APPELLANT NEIT HER AT THE ASSESSMENT PROCEEDINGS NOR AT THE APPELLATE STAGE. HENCE, THE ADDITION OF RS.10,00,000/- MADE ON THIS ACCOUNT IS CONFIRMED. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 94 9.4 AN AMOUNT OF RS. 2,60,000/- WAS RECEIVED FROM M RS. PRATIBHA MISHRA THE AO RECONCILE THE ABOVE TRANSACTION IN THE REGUL AR BOOKS OF ACCOUNT IN REPLY TO THE QUESTIONNAIRE THE APPELLANT MERELY STA TED THAT THE TRANSACTION RELATES TO PROJECT TULIP GREEN UNDERTAKEN BY M/S FO RTUNE SOUMYA HOUSING WHICH IS A PARTNERSHIP CONCERN BUT A.O HAS CLEARLY STATED IN PARA 9.4.3 THAT NAME OF MRS. PRATHIBA MISHRA HAS BEEN FO UND IN THE BOOKS OF ACCOUNT OF THE APPELLANT COMPANY. IF MRS PRATIBHA M ISHRA IS NOT DIRECTLY LINKED WITH THE APPELLANT'S COMPANY THEN HOW HER NA ME IS REFLECTED IN THE LEDGER OF THE WHICH WOULD CLARIFY THAT THE TRANSACT ION DOES NOT BELONGS TO THE APPELLANTS COMPANY THEREFORE, THE ADDITION OF R S. 2,60,000/- MADE ON THIS ACCOUNT IS CONFIRMED. 61. NOW AGGRIEVED ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 62. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DIARY ENTRIES ARE MADE BY A SALES EXECUTIVE TO FOLLOW THE PAYMENT S FROM THE CUSTOMERS, WHO HAVE BOOKED UNITS IN THE PROJECTS RU N BY APPELLANT COMPANY. THEY ARE JUST PROJECTIONS OF THE AMOUNT TO BE RECEIVED. THESE ARE NOTHING BUT THE ESTIMATES OF RECOVERY TO BE MADE FROM CUSTOMERS FOR THE FOLLOWING MONTHS AND ACTUAL RECOV ERY MAY VARY FROM ESTIMATE, AS THE CUSTOMER DID NOT PAY THE EXAC T AMOUNT AS DEMANDED. THE CONFIRMATIONS FROM FEW OF THE CUSTOM ERS WERE OBTAINED, WHO CONFIRMED THAT THE AMOUNT STATED IN L EDGER ACCOUNT ARE TRUE AND NO OTHER AMOUNT WERE PAID BY THEM. THE CONFIRMATION SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 95 FROM FOLLOWING CUSTOMERS ALONG WITH LEDGER AND PAPE R BOOK REFERENCES ARE TABULATED BELOW:- S.NO. NAME OF CUSTOMER PS REFERENCE 1. SHRI RAJVEER SINGH PS 518 2. SHRI SHASHIKANT GUPTA P S 540 3. SHRI RAVINDRA MALVYA PS 534 4. SHRI KISHORE MAHAJAN PS 524 THE EMPLOYEE WHO WROTE THE ENTRIES WAS NOT CONFRONT ED BY THE LD AO TO ASCERTAIN THE CORRECT FACTS. THE CUSTOMERS WERE NOT CONFRONTED. MERELY ON PRESUMPTIONS, ID LOWER AUTHOR ITIES MADE THE ADDITION. DEPARTMENT, FOR THE REASONS BEST KNOWN TO THEM, CHOOSE NOT TO ENQUIRE FROM THE EMPLOYEE OR CUSTOMERS. THE PAYMENT RELATES TO PURCHASE OF LAND, THE LEDGER ACCOUNT REFLECTING THE SAME PAYMENT IS AT PB 567. THUS, THE SAME WAS ENTERED IN BOOKS O F ACCOUNTS AND CANNOT BE TREATED AS UNACCOUNTED. THE PAYMENT IS MA DE TO SHRI HIRA CHOUDHARY- FOR SOUMYA EVER GREEN -KOLAR ROAD PROJEC T DATED 28.03.2011 (BY CHEQUE NO. 153061 FROM AXIS BANK). T HE REGISTERED PURCHASE DEED IS ON RECORD WHICH CONTAINS THE DETAI LS OF PAYMENT MADE TO SELLER (HIRA CHOUDHARY)(PB 568-573).THE BAS IS OF ADDITION IS A DUMB SHEET, WHICH IS A WORKING SHEET OF MARKETING EXECUTIVE. THIS SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 96 IS A ESTIMATE ONLY. RELIANCE IS PLACED ON FOLLOWIN G DECISIONS; CIT VS GIRISH CHOUDHARY 163 TAXMAN 608 (DEL.) BANSAL STRIPS 991TD 177 {DEL. TRIB.) FURTHER THE CONFIRMATION FROM SMT PRATIBHA MISHRA I S FILED NOW, WHO HAD CONFIRMED THAT SHE PAID THE SAME AMOUN T AS MENTIONED IN THE LEDGER ACCOUNT OF ASSESSEE COMPANY AND NO OTHER AMOUNT WAS PAID BY HER. 63. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED AND SUPPORTING ORDERS OF LOWER AUTHORITIES. 64. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE ASSESSEE HAS CHALLENGED THE FINDING OF LD.CIT(A) CONFIRMING THE ADDITION FOR UNACCOUNTED TRANSACTION OF RS.46,86,386/-, RS.10,00,000/- & RS.2,60,000/-. 65. WE WILL FIRST TAKE UP ADDITION FOR RS.46,86,386 /- WHICH HAVE ITS NEXUS FROM PAGE-39 OF LPS-28 SEIZED DURING THE COUR SE OF SEARCH WHICH CONTAINS DETAILS OF RESPECTIVE PARTIES. IT I S NOT DOUBTED THAT THE NAMES IN THIS DOCUMENT RELATES TO THE CUSTOMERS OF THE ASSESSEE SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 97 WHO HAVE PURCHASED THE FLATS. ALL THESE PERSONS HA VE THE LEDGER ACCOUNTS MAINTAINED IN THE BOOKS OF THE ASSESSEE. IT IS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE FIGURES M ENTIONED IN THE SEIZED DOCUMENT ARE THE PART OF THE DIARY ENTERED / PREPARED BY STAFF TO FOLLOW THE PAYMENT TO BE RECEIVED FROM THE CUSTO MERS FOR BOOKING UNITS IN THE PROJECT RUN BY THE APPELLANT COMPANY. CONFIRMATION FROM FEW OF THE CUSTOMERS WERE OBTAINED WHICH STATE D THAT APART FROM THE AMOUNT MENTIONED IN THE LEDGER AMOUNT NO O THER PAYMENT HAVE BEEN PAID BY THEM TO THE ASSESSEE. IT WAS ALS O BROUGHT TO OUR NOTICE THAT THE CONFIRMATIONS FROM PARTIES STATING THAT NO OTHER AMOUNT EXCEPT THE AMOUNT MENTIONED IN THE LEDGER HA VE BEEN RECEIVED AND HAVE BEEN FILED IN THE FIRST TIME BEFO RE US. BOTH THE LOWER AUTHORITIES HAD NO OPPORTUNITY TO EXAMINE THE SE EVIDENCES WHICH ARE PLACED AT PAGE 518 TO 562 OF THE PAPER BO OK FILED ON 6.7.17. WE THEREFORE ARE OF THE CONSIDERED VIEW TH AT THIS ISSUE OF ADDITION OF RS.46,86,348/- NEEDS TO BE SET ASIDE TO THE FILE OF LD. A.O SO AS TO VERIFY THE DOCUMENTS IN THE SHAPE OF CONFI RMATION FILED BY THE ASSESSEE TO HIS/HER SATISFACTION AND DECIDE ACC ORDINGLY AS TO WHETHER THE AMOUNT APPEARING IN THE SEIZED DOCUMENT ARE MERELY SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 98 ESTIMATES OR PROSPECTIVE AMOUNT TO BE RECEIVED OR ON-MONEY. IN CASE LD. A.O CONCLUDES THAT THE ALLEGED AMOUNT IS ON-MONEY THEN THE ADDITION FOR THE NET PROFIT ELEMENT EMBEDDED THEREIN SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE WHICH IS CONSIS TENTLY DECLARED. NEEDLESS TO MENTION THAT PROPER OPPORTUNITY IS TO B E PROVIDED TO THE ASSESSEE. WE THEREFORE ALLOW GROUND NO.6 FOR ASSESS MENT YEAR 2011- 12 FOR STATISTICAL PURPOSES. 66. AS REGARDS GROUND NO.7 FOR ADDITION OF RS.10,0 0,000/- IS CONCERNED WHICH IS BASED ON SEIZED DOCUMENT PAGE-3 OF LPS-4/30, WE FIND THAT SIMILAR HEAD HAVING FOUR AMOUNTS WAS F OUND IN WHICH ONE OF THE AMOUNT WAS RS.10,00,000/- AND THERE WAS NO PARTICULARS ALONG WITH THIS AMOUNT. THERE IS NO DATE ON THIS F ACE OF DOCUMENT. THIS AMOUNT WAS NOT EXPLAINED BY THE ASSESSEE BEFOR E LD. A.O WHICH WAS THEREFORE CONFIRMED BY LD. CIT(A). HOWEVER PER USAL OF THE DOCUMENT SHOWS THIS AMOUNT OF RS.10,00,000/- RELATE S TO ONE SHRI HIRA CHOUDHARY WHO HAVE BEEN PAID BY CHEQUE NO.1530 61 OF RS.10,00,000/- DATED 28.03.2011 IN CONNECTION TO PU RCHASE OF AGRICULTURE LAND AT KOLAR ROAD PROJECT. THE COPY O F LEDGER ACCOUNT SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 99 AND PURCHASE DEED ARE AVAILABLE AT PAPER BOOK AT P AGE 567 TO 573. REVENUE IS UNABLE TO CONTROVERT THIS DOCUMENT. MOR EOVER ON THE ALLEGED DOCUMENT SEIZED BY THE DEPARTMENT THERE IS MENTION OF THE DATE OR THE NAME OR THE PURPOSE FOR WHICH THE AMOUN T OF RS.10,00,000/- IS MENTIONED AND THEREFORE IN THESE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE EXPLANATION GIVEN BY LD. COUNSEL FOR THE ASSESSEE NEEDS TO BE ACCEPTED THAT THE IMPUGNED AMO UNT WAS PAID TO SHRI HIRA CHOUDHARY FOR PURCHASE OF LAND. WE THE REFORE SET ASIDE THE FINDINGS OF BOTH THE LOWER AUTHORITIES AND DELE TE THE ADDITION OF RS.10,00,000/-. IN THE RESULT GROUND NO.7 OF THE A SSESSEES APPEAL FOR ASSESSMENT YEAR 2011-12 IS ALLOWED. 67. AS REGARDS RS.2,60,000/- BEING THE ADDITION OF UNACCOUNTED RECEIPT FROM SMT. PRATIBHA MISHRA, WE FIND THAT THE CONFIRMATION OF SMT. PRATIBHA MISHRA WERE NOT PLACED BEFORE THE LOW ER AUTHORITIES WHEREIN SHE HAD STATED THAT APART FROM THE AMOUNTS STATED IN THE LEDGER ACCOUNT NO OTHER AMOUNT HAS BEEN PAID. WE IN CLINED TO SET ASIDE THIS AMOUNT FOR AFRESH ADJUDICATION TO THE FI LE OF LD. A.O DIRECTING THE ASSESSEE TO PLACE DOCUMENTS APPEARING AT PAGE 575 TO SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 100 579 OF THE PAPER BOOK BEFORE THE LD. A.O IN ORDER T O PROVE THAT NO SUCH AMOUNT OF RS.2,60,000/- WAS RECEIVED FROM SMT. PRATIBHA MISHRA AND IF LD. A.O IS SATISFIED WITH THE CONTENT S OF THE ASSESSEE HE CAN DECIDE ACCORDINGLY. IN THE RESULT GROUND NO.8 O F THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2011-12 IS ALLOWED FOR S TATISTICAL PURPOSES. 68. NOW WE TAKE UP GROUND NO.8 OF ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 RELATING TO ADDITION OF RS. 2,00,000/- ALLEGEDLY PAID TO CREDAI. 69. BRIEF FACTS OF THE CASE ARE THAT DURING THE CO URSE OF INQUIRY AT FORTUNE BUILDERS PG. NO.60 OF LPS-20 WAS SEIZED FRO M FS-1. IT CONTAINS DETAILS OF PROPERTY EXPO 2011. THE SEIZED PAPER CONTAINS ROUGH ENTRIES (WHICH ASSESSEE IS UNAWARE OF IT AND NOT IN THE HANDWRITING OF ANY OF ITS EMPLOYEES), WHICH ARE TRE ATED BY LD. A.O AS INCOME AND EXPENDITURE ACCOUNT OF CREDAI. IT WAS A LLEGED BY LD. A.O THAT A TOTAL OF 59.80 LACS WERE COLLECTED BY CR EDAI FROM BUILDERS OUT OF WHICH THE ASSESSEE COMPANY PAID RS.2 LAC IN SEPT, 2011. LD. A.O MADE THE ADDITION OF RS.2,00,000/- OBSERVING A S FOLLOWS; SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 101 12.1 THE COURSE OF SEARCH PROCEEDINGS, PAGE NO.60 OF LPS-20 WAS SEIZED FROM FS-1, WHICH CONTAINS THE DETAILS OF EXPENDITUR E OF PROPERTY EXPO 2011. THIS PAPER IS RELATED TO THE BODY OF BUILDER ASSOCIATION BHOPAL AND INCOME AND EXPENDITURE ACCOUNT WAS MAINTAINED IN TH E CREDAI. PAGE NO.60 OF LPS-20 CONTAINS THAT DURING SEPTEMBER 2011 , TOTAL AMOUNT OF RS.59.80 LACS WAS COLLECTED BY CREDAI FROM BUILDERS OUT OF WHICH THE ASSESSEE COMPANY MADE A PAYMENT OF RS.2,00,000/-. 12.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE COMPANY WAS ASKED TO EXPLAIN WHETHER THIS PAYMENT OF RS.2,0 0,000/- WAS DULY ACCOUNTED IN ITS BOOKS OF ACCOUNT OR NOT. NO EXPLA NATION OF THE SAME HAS BEEN RECEIVED. HENCE THE SAME REMAINS UNEXPLAINED EXPENDITURE AND IS HEREBY ADDED TO THE TOTAL INCOME OF THE ASSESSEE CO MPANY FOR A.Y. 2012- 13. PENALTY PROCEEDINGS U/S 271(1)(C) ARE HEREBY INITIA TED FOR A.Y. 2012-13. 70. WHEN THE AGGRIEVED ASSESSEE CAME IN APPEAL BEFO RE THE LD. CIT(A) FAILED TO GET RELIEF TO THE ADDITION OF RS.2 ,00,000/- AND WAS CONFIRMED BY LD. CIT(A) OBSERVING AS FOLLOWS; PAGE 60 OF LPS-20 CONTAIN DETAILS OF EXPENDITURE MA DE DURING PROPERTY EXPO 2011. CREDAI IS A BODY OF BUILDER ASSOCIATION BHOPAL. TOTAL AMOUNT OF RS.59.80 LACS WAS COLLECTED BY CREDAI FRO M BUILDERS AND OUT OF TOTAL AMOUNT OF RS.2,00,000/- WAS GIVEN BY THE A PPELLANTS COMPANY. THE APPELLANT ASSESSEE WAS ASKED BY THE A.O TO RECO NCILE AND EXPLAIN THE ABOVE TRANSACTION BUT NO SUBMISSION WHAT SO EVER HA S BEEN MADE NEITHER AT THE ASSESSMENT STAGE NOR AT THE APPELLATE STAGE. THUS IT IS CLEAR THAT THE APPELLANT HAS NOTHING TO SAY IN THIS REGARD. I N ABSENCE OF ANY MATERIAL SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 102 EVIDENCE AND PROOF THE ADDITION OF RS.2,00,000/- MA DE BY THE A.O ON ACCOUNT OF UNACCOUNTED PAYMENT TO CREDAI IS CONFIRM ED. THE GROUND OF APPEAL FOR A.Y. 2012-13 IS DISMISSED . 71. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 72. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DOCUMENT IS NOT IN HANDWRITING OF ANY OF ITS EMPLOYEES, IT WAS NOT FOUND FROM THE ASSESSEE'S PREMISES. LD AO CHOOSE NOT TO VERIFY THE FACT FROM THE EMPLOYEE OF FORTUNE GROUP, WHO WROTE IT. ALSO, LD A O CHOOSE NOT TO VERIFY IT FROM CREDAI ABOUT THE DOCUMENT WHICH WAS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE, NOR IN HANDWRITING OF ANY OF THEIR EMPLOYEES THEREFORE IT COULD NOT BE USED AGAINST TH E ASSESSEE. RELIANCE IS PLACED ON V.C. SHUKLA 1998 SCC 410 COMM ON CAUSE (SC) (SUPRA). THE AUTHENTICITY OF THE OTHER ENTRIE S IN THE RECEIPT AND PAYMENT OF CREDAI WAS NEVER ESTABLISHED BY DEPTT. T HUS, ADDITION PURELY ON THE BASIS OF RECORDS OF THIRD PARTY IS NO T JUSTIFIED. THE ASSESSEE COMPANY WOULD ALWAYS TRY TO RECORD ALL THE EXPENSES, AND THIS BEING DIRECTLY RELATED TO MARKETING EXPENDITUR E OF THE REAL ESTATE BUSINESS, HIDING SUCH EXPENSES IS REALLY OUT OF QUE STION. SUCH A PRESUMPTION WOULD BE TOTALLY WRONG. IN ANY CASE, TE LESCOPING BENEFIT SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 103 OF THE SAME OUGHT TO HAVE BEEN GIVEN FROM THE ADDIT IONS, FOR UNACCOUNTED RECEIPTS, IF ANY MADE FOR EARLIER OR CU RRENT YEAR. 73. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED AND SUPPORTING THE ORDERS OF LOWER AUTHORITIES. 74. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THROUGH GROUND NO.8 ASSESSEE CHALLENGED THE ADDITION OF RS.2,00,000/- CONFIRMED BY LD. CIT(A) PERTAINING TO UNEXPLAINED PAYMENT TO CREDAI. CREDAI IS A BODY OF BUILDER ASS OCIATION AT BHOPAL. DURING THE COURSE OF SEARCH IN THE SEIZED DOCUMENT FROM FS-1 APPEARING AT PAGE-60 OF LPS-20 CONTAINED THE D ETAILS OF EXPENDITURE OF PROPERTY EXPO 2011. IN THIS PAPER D EALS AMOUNT OF RS.59.80 LACS COLLECTED BY CREDAI FROM VARIOUS BUIL DERS WAS MENTIONED WHICH ALSO INCLUDED RS.2 LACS RECEIVED FR OM THE ASSESSEE. THOUGH THE LD. COUNSEL FOR THE ASSESSEE CONTENDED T HAT THESE DOCUMENT NOT PREPARED BY IT WAS NOT FOUND IN THE PO SSESSION OF THE ASSESSEE, NOR IN THE HAND WRITING OF ANY OF THE EMP LOYEE AND THEREFORE THE AUTHENTICITY OF THE ENTRIES IN THE RE CEIPT AND PAYMENT OF CREDAI IS NOT ESTABLISHED, BUT IN OUR CONSIDERED V IEW CREDAI SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 104 BEING ASSOCIATION OF BUILDERS AT BHOPAL HAVING DET AILS OF AMOUNT COLLECTED FROM VARIOUS BUILDERS THE ONUS WAS ON THE ASSESSEE TO PROVE WHETHER HE HAD MADE ANY PAYMENT BY CHEQUE OR CASH OF RS.2 LACS TO CREDAI. NO SUCH DETAILS HAVE BEEN FILED BE FORE BOTH THE LOWER AUTHORITIES AND BEFORE US. IT SEEMS THAT AS SESSEE HAS NO EXPLANATION TO GIVE FOR SUCH EXPENDITURE AND THE SA ME HAS BEEN RIGHTLY ADDED TO THE INCOME OF THE ASSESSEE AS AN U NEXPLAINED EXPENDITURE. WE ACCORDINGLY CONFIRM THE ADDITION O F RS.2,00,000/- AND DISMISS GROUND NO.8 OF THE ASSESSEE FOR ASSESSM ENT YEAR 2012- 13. 75. NOW WE TAKE UP THE REMAINING GROUNDS 7 & 8 RAIS ED BY THE ASSESSEE IN RESPECT OF UNACCOUNTED TRANSACTION OF R S.59,80,000/- AND UNACCOUNTED EXPENDITURE OF RS.3,00,000/- FOR AS SESSMENT YEAR 2013-14. 76. BRIEF FACTS RELATING TO ADDITION OF RS.59,80 ,000/- ON ACCOUNT OF ALLEGED UNACCOUNTED TRANSACTION ARE THAT DURING THE SEARCH PROCEEDINGS, LPS-28, PG-29 WAS SEIZED WHICH CONTAIN S NAME OF PERSONS ALONG WITH AMOUNT. ON ENQUIRY IT WAS SUBMI TTED THAT THIS SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 105 DATA IS PREPARED BY ONE OF THE EMPLOYEE FOR HER PER SONAL USE. LD.A.O CONSIDERED THESE AS HAWALA ENTRIES WHICH WERE NOT F OUND ENTERED IN BOOKS OF ACCOUNTS AND ADDED THE SAME TO THE TOTAL I NCOME OF THE ASSESSEE COMPANY. THE LD.CIT(A) HELD THAT SINCE THE ASSESSEE COMPANY COULD NOT SUBMIT ANY EVIDENCE TO PROVE THE CLAIM THAT DOCUMENT SEIZED FROM PREMISES CONTAINS PERSONAL DET AILS OF AN EMPLOYEE AND ALSO THAT THE PAYMENTS, COULD NOT BE R ECONCILED WITH THE BOOKS OF ACCOUNTS, THE ADDITION NEEDS TO BE CO NFIRMED. 77. AS REGARDS ADDITION OF RS.3,00,000/- ON ACCOUNT OF ALLEGED UNACCOUNTED EXPENDITURE THE BRIEF FACT IS THAT CASH PAYMENT OF RS.3,00,000/- WAS SHOWN TO GANGA BRICKS ON 17.08.20 12 AT PG NO.179 OF BS-1, FS-4. ON ENQUIRY, LEDGER A/C OF GA NGA BRICKS WAZS SUBMITTED AND ALSO THAT THIS PAYMENT IS NOT RELATED TO SOUMYA HOMES PVT. LTD AND MAY BE RELATED TO M/S. FORTUNE S OUMYA HOUSING. THE LD. CIT(A) CONFIRMED THE ADDITION AS THE ABOVE WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF ASSESSEE COMPA NY. 78. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL AGAINST THE ADDITIONS OF RS.59,80,000/- AND RS.3,00,000/- . SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 106 79. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ALLEGED ADDITIONS FOR UNACCOUNTED TRANSACTION OF RS.59,80,0 00/- FOUND FROM THE SEIZED DIARY IS A PERSONAL DOCUMENT OF MARKETI NG EXECUTIVE, KUM. VANDANA RAI, WHO HAS JOTTED THE NAME AND SALAR Y PACKAGES OF PROSPECTIVE GROOMS FROM A MATRIMONIAL WEBSITE. THE PAGE CONTAINS NAME OF PERSON, ALONG WITH MATRIMONIAL SITE (WWW.KALARMATRIMONY.COM ) I.E LIKE KLMXXXXXX ETC. THE PAGES FROM WEBSITE WITH SIMILAR REFERENCE NUMBERS ARE AT PB 563A-565 TO PROVE THAT THESE ARE MATRIMONIAL WEBSITE ID. THE A SSESSEE COMPANY HAS NOT INCURRED ANY ALLEGED OUT OF BOOKS EXPENDITU RE OR RECEIVED ANY MONEY FROM THEM. NO EVIDENCE TO PROVE THE SAME IS BROUGHT ON RECORD. LD. A.O COULD NOT BRING ON RECORD ANY STAT EMENT OF EMPLOYEE, OR THEIR PARTY OR ANY OTHER CORROBORATIVE EVIDENCE TO PROVE THAT THE PAYMENT WAS MADE. THE LOOSE PAPER DOES NO T MENTION DATES, YEAR, PAID OR RECEIPT. IT WAS MERELY A DUMB DOCUMENT. THE LD.A.O HIMSELF GAVE THE FINDINGS THE NAMES ARE NOT FOUND IN BOOKS OF ASSESSEE-COMPANY. NO EVIDENCE OF ANY PROPERTY S OLD TO THESE PERSONS WAS EVER BROUGHT ON RECORD. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 107 80. AS REGARDS ADDITION OF RS.3,00,000/- ON ACCOUNT OF ALLEGED UNACCOUNTED EXPENDITURE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THIS TRANSACTION DOES NOT RELATE TO THE PETITI ONER COMPANY, IT RELATES TO FORTUNE SOUMYA HOUSING, WHICH IS A SEPAR ATE FIRM. NO EFFORTS WERE EVER TAKEN BY THE DEPARTMENT TO ISSUE SUMMON TO M/S. GANGA BRICKS TO CROSS VERIFY. 81. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGU ED AND SUPPORTING THE ORDERS OF LOWER AUTHORITIES. 82. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. 83. AS REGARDS ADDITION OF RS.59,80,000/- CHALLENGE D BY THE ASSESSEE IN GROUND NO.7, WE OBSERVE THAT THIS ADDIT ION WAS BASED ON THE SEIZED DOCUMENT APPEARING AT PAGE-29 OF LPS-28. PERUSAL OF THIS DOCUMENT SHOWS THAT VARIOUS NAMES ARE MENTIONED ALO NG WITH SOME CODE AND THE AMOUNT ALONG WITH THESE NAMES. FOR REF ERENCE WE WILL TAKE TWO ENTRIES FROM THIS DOCUMENT; (A) YOGESH (KLM 103795) RS. 7 LACS SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 108 (B) ADITYA (KLM 0102938) RS. 6 LACS THE ABOVE REFERRED SHEET PAGE-29 WAS FOUND IN THE P ERSONAL DOCUMENT OF MARKETING EXECUTIVE KUMARI VANDANA RAI. IT HAS BEEN CONTENDED BEFORE US THAT KUMARI VANDANA RAI HAS JOT TED THE NAME AND SALARY PACKAGE OF PROSPECTIVE GROOMS FROM THE M ATRIMONIAL WEBSITE. LD. COUNSEL FOR THE ASSESSEE HAS PLACED S AMPLE PRINT OUT OF WEBSITE PLACED AT 563A, 564 AND 565. ON PERUSAL OF THIS WEBSITE I.E. WWW.KALARMATRIMONY.COM WE FIND THAT A CODE IS ISSUED FOR THE BOY (FOR INSTANCE PAGE KLM 1155237) IS ISSUED TO MR. DE EPAK MURKUTE, INDORE, M.P WHO IS A MARKETING MANAGER IN THE COMPA NY. SIMILAR CODES ARE GIVEN TO OTHER PERSONS ALSO AND THEY ARE APPEARING IN THIS MATRIMONIAL SITE. COMPARING THIS PRINT OUT OF THE MATRIMONIAL SITE WITH PAGE-29 OF LPS-28, WE FIND THAT SIMILAR CODES ARE MENTIONED THEREIN AND AMOUNT MENTIONED IN FRONT OF THE CODES ARE THE YEARLY PACKAGES. IN OUR CONSIDERED VIEW THIS DOCUMENT AT PAGE 29 OF LPS- 28 IS PURELY AN INFORMATION PREPARED AND GATHERED B Y KUMARI VANDANA RAI FOR THE PROSPECTIVE GROOMS AND THE AMOU NTS MENTIONED ARE THE YEARLY PACKAGES OF THE BOYS AND THEREFORE T HERE IS NO IOTA OF EVIDENCE TO PROVE THAT THESE AMOUNTS ARE THE INCOME OF THE ASSESSEE. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 109 THEREFORE THE SEIZED DOCUMENT AT PAGE-29 OF LPS-28 IS A DUMP DOCUMENT AND NO ADDITION CAN BE MADE ON THE BASIS O F THIS DOCUMENT. WE THEREFORE DELETE THE ADDITION OF RS.5 9,80,000/- MADE BY THE LD. A.O AND SET ASIDE THE FINDING OF LD. CIT (A). IN THE RESULT GROUND NO.7 OF ASSESSEES APPEAL FOR ASSESSMENT YEA R 2013-14 IS ALLOWED. 84. AS REGARDS RS.3,00,000/- FOR THE ALLEGED UNACCO UNTED EXPENDITURE, WE FIND THAT CASH PAYMENT OF RS.3,00, 000/- WAS GIVEN TO M/S GANGA BRICKS ON 17.08.2012. THE CONTENTION OF THE ASSESSEE IS THAT THIS DEAL PERTAINS TO FORTUNE SOUMYA HOUSIN G HAS NO BASIS TO STAND FOR BECAUSE THE DOCUMENT AT PAGE-179 OF BS-1 SEIZED FROM FS- 4 WAS FOUND AT THE BUSINESS PREMISES OF THE ASSESSE E AND THE ASSESSEE BEING IN THE BUSINESS OF BUILDER AND DEVEL OPER, THERE IS A DIRECT CONNECTION OF THE BUSINESS WITH THIS CASH PA YMENT TO GANGA BRICKS WHICH ALSO BEARS THE DATE OF PAYMENT. THERE FORE WE FIND NO MERIT IN THE CONTENTION OF LD. COUNSEL FOR THE ASS ESSEE AND ARE INCLINED TO CONFIRM THE FINDING OF LD. CIT(A) AND W E THEREFORE CONFIRM THE ADDITION OF RS.3,00,000/- AND DISMISS ASSESSEE S GROUND NO.8 SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 110 FOR ASSESSMENT YEAR 2013-14. 85. NOW WE TAKE UP REMAINING GROUND OF REVENUES AP PEAL. 86. THE FIRST COMMON ISSUE TAKEN UP BY THE REVENUE RELATES TO DEDUCTION U/S 80IB(10) OF THE ACT WHICH WAS ALLOWED BY LD. CIT(A) FOR ASSESSMENT YEAR 2009-10, 2010-11 AND 2011-12 AT RS.28,86,091/-, RS.74,78,422/- AND RS.1,17,39,995/- RESPECTIVELY. 87. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) FOR THE PROJECT SOUMYA ESTAT E WHICH WAS EXECUTED UNDER THE JOINT VENTURE AGREEMENT WITH SHR I ATIQ AHMAD, SANJAY SINHA AND ASHOK JAISWAL. THE PROJECT HAS BEEN APPROVED IN THE NAME OF SOUMYA ESTATE ON 26.3.2007. THE REQUIR ED APPROVAL, PLAN ETC IN RESPECT OF THIS PROJECT HAVE ALREADY BE EN FILED DURING THE COURSE OF ORIGINAL ASSESSMENT FOR ASSESSMENT YEAR 2 009-10. LD. A.O DID NOT ALLOW THE DEDUCTION U/S 80IB(10) OBSERVING AS FOLLOWS; THE ASSESSEE IS NOT UNDERTAKING DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT. THE ASSESSEE NEITHER THE OWNER NOR THE SELLER OF THE LAND ON WHICH PROJECT IS CLAIMED TO HAY B EN UNDERTAKEN. THE ASSESSEE IS MERELY ACTING AS A CONTRACTOR TO THE CUSTOMERS TO WHOM SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 111 LAND HAS BEEN SOLD. NO REGISTRY WHATSOEVER IS BEING MADE FOR THE CONS TRUCTION WORK DONE BY THE ASSESSEE. INTENTION BEHIND ANY DEDUCTION U/S 80IB IS TO PRO MOTE INVESTMENT IN A PARTICULAR SECTOR, WHICH IS LESS PROFITABLE. IN ASS ESSEE'S CASE VIRTUALLY NO INVESTMENT WAS MADE TO START THE PROJECT AND RETURN ON CAPITAL OR PROFITABILITY IS VERY SUBSTANTIAL. PERMISSION FOR THE PROJECT IS GIVEN TO THE SANDHY A BHEL SHRAMIK GRIH NINNAN SAHAKARI SANSTHA MYDT. AND NOT TO THE ASSESS EE, HENCE IT CAN BE DEFINITELY SAID THAT THE ASSESSEE HAS NOT GOT ANY A PPROVAL FOR THE AFORESAID CONSTRUCTION WHICH IS CLAIMED AS A PROJECT. CONDITI ON FOR APPROVAL OF THE PROJECT IS ALSO PRIMARILY FOR DENYING EXEMPTION TO SUCH KIND OF CONSTRUCTION RECEIPTS. POSSESSION WAS GIVEN BEFORE OBTAINING THE COMPLET ION CERTIFICATE WHICH IS A GROSS VIOLATION OF CONDITION NUMBER 7 OF APPROVAL CERTIFICATE AND HENCE AS PER CONDITION 8 CERTIFICATE STANDS CANCELLED AUT OMATICALLY. HENCE THE PROJECT IS WITHOUT ANY APPROVAL CERTIFICATE AND WIT HOUT THE PERMISSION. WHILE U/S 80IB (10) IT IS ESSENTIAL REQUIREMENT FOR THE DEDUCTION THAT PROJECT SHOULD BE APPROVED BY A LOCAL AUTHORITY WHI LE IN CASE OF ASSESSEE WHOLE PROJECT IS WITHOUT THE PERMISSION. THE ASSESSEE IS NOT TAKEN COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY WHICH IS TO BE TAKEN AS PER THE AMENDED PROVISIONS OF THE SECTION 80IB (10). SINCE THE PROJECT OF THE ASSESSEE IS CLAIMED TO BE COMPLETED ON 31.03.2006 THE YEAR WITH THE PREVIEW OF AMENDED PRO VISIONS. THE ASSESSEE IS BUILDING HOUSES WHICH ARE MORE TH EN 1500 SQ. FT, IN SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 112 AREA THIS VIOLATE THE CONDITION [OR ALLOW ABILITY O F 8OIB DEDUCTION AS IT VIOLATES SECTION 80IB (L0)(C). IN THE LIGHT OF ABOVE FACTS AND DISCUSSION, IT IS E STABLISHED AND HELD THAT THE CLAIM OF THE ASSESSEE U/S 80IB (10) IS NOT MAIN TAINABLE AS PER ACT. ACCORDINGLY THE SAME IS DISALLOWED AND IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. 88. THEREAFTER ASSESSEE CAME IN APPEAL BEFORE LD.CI T(A). IT SUCCEEDED AS THE DEDUCTION U/S 80IB(10) WAS ALLOWED BY LD. CIT(A) OBSERVING AS UNDER; 6.4 I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRC UMSTANCES OF THE CASE AS ALSO THE MATERIAL PLACED ON RECORD, THE VARIOUS DEC ISIONS CITED BY THE LEARNED AR AND ALSO PERUSED THE CASE RECORD. AS MAY BE SEEN FROM THE FOREGOING DISCUSSION OF FACTS, SINCE THE HOUSING PR OJECT IN THE NAME OF SOUMYA ESTATE-1 WAS APPROVED FROM THE LOCAL AUTHORI TIES EN 26.03.2007 AND THE COMPLETION CERTIFICATE HAS BEEN OBTAINED ON 25.05.2010 FROM MUNICIPAL CORPORATION BHOPAL, SINCE THE PROJECT WAS APPROVED AFTER 0104.2005 THE COMPLETION CERTIFICATE FOR THE SAME W AS TO BE OBTAINED WITHIN FIVE YEARS IN THE CASE OF APPELLANT ASSESSEE THE SAME WAS DULY OBTAINED IN TIME THEREFORE, THE CLAIM OF THE APPELL ANT FOR DEDUCTION U/S 80 IB (10) OF THE ACT FOR ASSESSMENT YEARS 2007-08, 20 09-10, 2010-11&2011- 12 WAS FOUND TO BE CORRECT SINCE THE APPELLANT HAS FULFILLED THE CONDITION LAID DOWN IN SECTION 80LB (10) OF THE ACT ITS CLAIM IS ALLOWED. IN CIT V GLOBAL REALITY (2015) 280 CTR(MP) 558, IT HAS BEEN HELD THAT, 'AT THE RELEVANT TIME WAS, THAT THE DEVELOPMENT AND CONSTRUCTION OF THE SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 113 HOUSING PROJECT HAD COMMENCED OR COMMENCES ON OR A FTER 01.10.1998.THIS STIPULATION HAS BEEN MODIFIED BY TH E AMENDED CLAUSE (A). AS PER AMENDED CLAUSE (A)' WITH WHICH WE ARE CONCER NED, THE HOUSING PROJECT APPROVED BEFORE 31.03.2007 BY A LOCAL AUTHO RITY WOULD RECEIVE THE BENEFIT OF DEDUCTION PROVIDED THE ITA.NOS. 40/2012 , 36/2012 & 35/2012 16 DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJ ECT HAS COMMENCED OR COMMENCES ON OR AFTER 01.10.1998 AND IS COMPLETE D WITHIN SPECIFIED TIME IN THAT, HOUSING PROJECTS APPROVED BY THE LOCA L AUTHORITY BEFORE O1. 04.2004 MUST BE COMPLETED BEFORE 31.03.2008; AND TH E HOUSING PROJECT APPROVED ON OR AFTER 01.04.2004 BUT BEFORE 31.03.20 07 SHOULD BE COMPLETED WITHIN FOUR YEARS FROM THE END OF THE FIN ANCIAL YEAR IN WHICH THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY . THE AMENDMENT FURTHER POSTULATES THAT, THE 'DATE OF COMPLETION OF CONSTRUCTION' OF THE HOUSING PROJECT SHALL BE RECKONED OIL THE BASIS OF 'THE DATE ON WHICH' THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING P ROJECT 'IS ISSUED' BY THE LOCAL AUTHORITY WE ACCORDINGLY HOLD THAT ISSUANCE OF COMPLETION CER TIFICATE, AFTER THE CUT OFF DATE BY THE LOCAL AUTHORITY BUT, MENTIONING THE DATE OF COMPLETION OF PROJECT BEFORE THE CUT OFF DATE DOES NOT FULFIL THE CONDITION SPECIFIED IN CLAUSE (A) OF SECTION 80 IB (10) READ WITH EXPLANAT ION (II). WE REJECT THE ARGUMENT OF THE ASSESSEE THAT THE EFFECT OF AMENDED CLAUSE (A) OF SUB- SECTION 10 OF SECTION 801B, WHICH HAS COME INTO FOR CE WITH EFFECT FROM 1 ST APRIL, 2005, HAS RETROSPECTIVE EFFECT OR THAT IT IS UNJUST IN ANY MANNER OR INCAPABLE OF COMPLIANCE AT ALL SIMILARLY, THE REQUI REMENT OF SECURING COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORIT Y BEFORE THE CUT OFF DATE IS NOR DIRECTORY, IN VIEW OF THE EXPRESS PROVISION IN SECTION 80IB(10)(A) AND THE EXPLANATION (II) THERE UNDER. THE COMPLETIO N CERTIFICATE GRANTED BY THE LOCAL AUTHORITY MUST HEAR THE DATE OF HAVING BE EN ISSUED BEFORE THE SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 114 CUT OFF DATE. THAT TAKES US TO THE ARGUMENT OF THE ASSESSEE THAT THE STIPULATION IN SECTION 80IB(10)(A) OF COMPLETION CERTIFICATE ISSUE D BY THE LOCAL AUTHORITY BEFORE CUT OFF DATE, CANNOT BE APPLIED IN THE CASE OF ASSESSEE FOLLOWING THE WORK IN PROGRESS ACCOUNTING METHOD IN OUR OPINION THE PROVISION IN THE FORM OF SECTION 80IB(10)(A) APPLIES UNIFORMLY TO AL L THE ASSESSEES - BE IT FOLLOWING WORK ILL PROGRESS ACCOUNTING METHOD OR OT HERWISE. THE BENEFIT OF DEDUCTION UNDER THIS PROVISION CAN BE AVAILED BY TH E ASSESSEE FOLLOWING THE WORK IN PROGRESS ACCOUNTING METHOD, PROVIDED HE HAS COMPLIED WITH THE STIPULATION OF HAVING PRODUCED COMPLETION CERTI FICATE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE, AS MAY BE APPLICABLE IN HIS CASE. IN OTHER WORDS, IF THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY BEFORE 1ST APRIL, 2004, HE MUST SUBMIT COMPLETION C ERTIFICATE ISSUED BY THE AUTHORITY HAVING BEEN ISSUED BEFORE THE 31ST MARCH, 2008. WHEREAS, IN THE CASE OF HOUSING PROJECT APPROVED ON OR AFTER 1 ST APRIL, 2004, THE ASSESSEE CAN AVAIL OF THE BENEFIT PROVIDED COMPLETI ON CERTIFICATE ISSUED BY THE LOCAL AUTHORITY IS WITHIN FOUR 'YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE CONCERNED HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY IN THIS CONDITION IS NOT FULFILLED, THE A SSESSEE WHO MAINTAINS WORK IN PROGRESS ACCOUNTING METHOD AND HAS CLAIMED DEDUCTION UNDER SECTION 80IB(10)(A) MUST SUFFER THE CONSEQUENCE OF DISALLOWANCE OR WITHDRAWAL OF THE BENEFIT CLAIMED BY HIM ON THAT CO UNT ' 6.5. FROM THE FACTS AND CIRCUMSTANCES CITED ABOVE A ND THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V GLOB AL REALITY (2015) 280 CTR (MP) 558, I AM OF THE VIEW THAT THE A0 WAS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT ASSESSEE HAS COMMITTED THAT IN F URNISHING INACCURATE PARTICULARS OF INCOME BY CLAIMING DEDUCTION UNDER S ECTION 80IB(10) OF THE ACT. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 115 IN THE APPELLANTS CASE THE FACTS SHOW THAT HE HAD FULFILLED THE CONDITIONS LAID DOWN IN 80IB(10) OF THE ACT, AND PREFERRED TO MAKE THE CLAIM OF DEDUCTION UNDER THE SECTION. THE APPELLANT HAS MADE CLAIM OF DEDUCTION U/S 80 IB (L0) WHEREIN, THE PERMISSION CERTIFICATE AND COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY HAVE BEEN UN R UINED WITHIN CUT OFF DATE WHICH IS THE MOST BASIS REQUIREMENT TO CLAIM DEDUCT ION U/S 80IB (10) 89. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L. 90. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE CO-ORDINATE BENCH, INDORE IN THE AS SESEES OWN CASE FOR ASSESSMENT YEAR 2009-10 WHICH CAME FOR HEARING AGAINST THE ORDER OF FINDING BY LD. CIT(A) DATED 18.5.2012 WHIC H ARISED FROM THE ASSESSMENT ORDER FRAMED U/S 143(3) OF THE INCOME TA X ACT. THIS HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ITA NO. 464/INDORE/2012 ORDER DATED 31.01.2013. HE ALSO SUBMITTED THAT THE DEDUCTION U/S 80IB(10) OF THE ACT RELATES TO THE SAME PROJECT. 91. LD. DEPARTMENTAL REPRESENTATIVE THOUGH SUPPORTE D THE ORDER OF LD. A.O BUT COULD NOT CONTROVERT THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS COVERED BY THE D ECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 116 92. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND ALSO GONE THROUGH THE DECISION OF THE TRIBUNAL. 93. THE ISSUE BEFORE US IS THE ELIGIBILITY OF DEDUC TION U/S 80IB(10) AT RS.28,86,091/-, RS.74,78,422/- AND RS.1,17,39,99 5/- FOR ASSESSMENT YEAR 2009-10, 2010-11 AND 2011-12 RESPEC TIVELY. WE FIND THAT REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE FINDING OF LD. CIT(A) ALLOWING THE DEDUCTION U/S 80IB(10) O F THE ACT FOR ASSESSMENT YEARS 2009-10, 2010-11 AND 2011-12 WHICH ARISES FROM THE ADDITION DENIED BY LD. A.O DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THERE IS NO DISPUTE AT THE END OF BOT H THE PARTIES THAT THE SAME PROJECT IN THE NAME SOUMYA ESTATE, KHAJURI KALAN, BHOPAL WAS IN QUESTION ALLOWING DEDUCTION U/S 80IB OF THE ACT FOR ALL THE THREE YEARS. THEREFORE THE CONDITIONS WHICH ARE RE QUIRED TO BE FULFILLED U/S 80IB OF THE ACT HAVE BEEN ADHERED BY THE ASSESSEE AT THE TIME OF CLAIM FOR ASSESSMENT YEAR 2009-10 AND THERE FORE THE ASSESSEE WILL BE ELIGIBLE TO CLAIM THE DEDUCTION FO R SUBSEQUENT YEARS ALSO AS PER SECTION 80IB. WE FIND THAT THE CO-ORDI NATE BENCH CONFIRMED THE VIEW TAKEN BY LD. CIT(A) THEREBY ALLO WING DEDUCTION SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 117 U/S 80IB OBSERVING AS FOLLOWS; 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECI SION OF THE IT.A.T. 'IN THE CASE OF GAYATRI BUILDERS IN LT.A.NO. 500/LND/20 1O ORDER DATED 1 ST JUNE, 2012, WHEREIN FOLLOWING OBSERVATIONS AND CONC LUSION WERE DRAWN BY THE TRIBUNAL. 7. MERELY BECAUSE THE ASSESSEE HAD ENTERED INTO AG REEMENT FOR SALE OF PLOT SO AS TO ENABLE THE CUSTOMER TO HAVE A LOAN FACILITY FROM BANK AND OTHER FINANCIAL INSTITUTIONS WILL NOT GO TO PRO VE THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY CONSTRUCTION. AS PER THE AG REEMENT ENTERED INTO BY THE ASSESSEE WITH THE CUSTOMERS, THE ASSESS EE WAS REQUIRED TO UNDERTAKE CONSTRUCTION OF THE RESIDENTIAL UNIT A S A WHOLE. IT APPEARS THAT THE ASSESSING OFFICER HAS MIS-INTERPRE TED VARIOUS AGREEMENTS ENTERED BY THE ASSESSEE WITH ITS CUSTOME RS. NOT ONLY AS PER PROJECT APPROVAL LETTER BUT ALSO AS PER THE CER TIFICATE DATED 31 ST OCTOBER, 2009, ISSUED BY THE OFFICE OF SUB DIVISION AL OFFICER, THE ASSESSEE HAS NOT ONLY CONCEIVED THE ENTIRE HOUSING SCHEME BUT ALSO EXECUTED THE WORK AS PER APPROVAL PLAN. THE ASSESS EE HAD ENTERED INTO COMPREHENSIVE SALE AGREEMENT WITH THE CUSTOMER S FOR THE PURPOSE OF SALE OF COMPLETE RESIDENTIAL UNITS. IT IS A NORMAL TRADE PRACTICE TO RECEIVE PAYMENT IN INSTALMENTS AS PER T HE PROGRESS OF THE PROJECT, AS MOST OF THE CUSTOMERS GOT HOUSES FI NANCED FROM THE BANK AND THE BANK RELEASE THE FUNDS AS PER PROGRESS OF THE WORK. FACILITY OF REGISTRATION OF STRUCTURE WAS MADE AVAI LABLE TO THE CUSTOMERS ONLY WITH A VIEW TO PROVIDE THEM MORTGAGE ABLE SECURITIES TO AVAIL BANK FINANCE. AS PER THE AGREEMENT, THE PO SSESSION OF SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 118 RESIDENTIAL UNIT REMAINED WITH THE ASSESSEE TILL FI NAL INSTALMENT IS PAID. THE CUSTOMER HAS NO AUTHORITY TO GET CONSTRUC TION WORK DONE BY ANY OTHER 'PERSON OTHER THAN THE ASSESSEE. IN VI EW OF THESE FACTS, WE DO NOT FIND ANY MERIT ON THE PART OF ASSESSING O FFICER'S ACTION FOR TREATING THE ASSESSEE MERELY AS A CONTRACTOR 'RATHE R THAN A DEVELOPER' THUS, THE ASSESSEE IS NOT HIT ADVERSELY BY THE EXPLANATION TO SECTION 80IV(10), WHICH WAS' MADE EF FECTIVE FROM 1 ST . APRIL, 2001. 5. AS THE FACTS AND CIRCUMSTANCES IN THE INSTANT CA SE IS PARI MATERIAL, RESPECTFULLY FOLLOWING THE SAME IN THE LIGHT OF FIN DINGS RECORDED BY THE LD.. CIT(A) AT PARA ,2.3 AS REPRODUCED HEREINABOVE, WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB(10) OF THE ACT. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. 94. WE THEREFORE RESPECTFULLY FOLLOWING THE DECISIO N OF THE CO- ORDINATE BENCH AND THE GIVEN FACTS AND CIRCUMSTANCE S OF THE CASE FIND THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/ S 80IB FOR SOUMYA ESTATE PROJECT AS HELD BY THE TRIBUNAL THAT ALL THE PRE CONDITIONS HAVE BEEN FULFILLED BY THE ASSESSEE WHICH INTER-ALI A INCLUDES THE APPROVAL FROM THE LOCAL BODIES ON 26.3.2007 FOR THE HOUSING PROJECT IN THE NAME OF SOUMYA ESTATE AND THE COMPLETION CER TIFICATE OBTAINED ON 29.10.2005 FROM THE MUNICIPAL CORPORATI ON, BHOPAL. WE THEREFORE FIND NO REASON TO INTERFERE IN THE FIN DING OF LD. CIT(A) SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 119 ALLOWING THE DEDUCTION U/S 80IB(10) OF THE ACT FOR ASSESSMENT YEAR 2009-10, 2010-11 AND 2011-12 AT RS.28,86,091/-, RS. 74,78,422/- AND RS.1,17,39,995/- RESPECTIVELY. ACCORDINGLY THIS COMMON GROUND RAISED BY THE REVENUE AGAINST ALLOWING DEDUCTION U/ S 80IB RAISED BY THE REVENUE FOR ASSESSMENT YEAR 2009-10, 2010-11 ST ANDS DISMISSED. 95. NOW WE TAKE UP THE ISSUE RAISED BY THE REVENUE RELATING TO UNACCOUNTED EXPENDITURE OF RS.10,85,100/- FOR ASSES SMENT YEAR 2013-14. 96. THE BRIEF FACTS OF THE ISSUE ARE THAT PAGE 185 AND 186 OF BS-1 PART OF SEIZED DOCUMENT CONTAINED DETAILS OF FIVE T RANSACTIONS FOR WHICH LD. A.O WAS NOT SATISFIED WITH THE SUBMISSION S OF THE ASSESSEE AND THEREFORE ALL THESE TRANSACTIONS WHICH TOTALLED TO RS.10,85,100/- WERE TREATED AS UNEXPLAINED CASH EXPENDITURE AND AD DED TO THE INCOME OF THE ASSESSEE. AGGRIEVED WITH THE ADDITIO NS ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) AND SUCCEEDED AS THE LD. CIT(A) WAS SATISFIED WITH THE EXPLANATION GIVEN BY THE ASS ESSEE. 97. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 120 98. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. WE OBSERVE THAT FOLLOWING TRANSACTIONS W ERE APPEARING IN PAGE 185 AND 186 OF BS-1; (A) RS. 34,600/- AGAINST KHAYATI ENTERPRISES (B) RS.4,00,000/- AGAINST BINANI PUMPS (C) RS. 1,97,000/- AGAINST TILES GALLERY (D) RS.49,500/- AGAINST RAJU RAM SAINI (E) RS.4,04,000/- AGAINST SHUBHAM ENTERPRISES 99. WE FIND THAT WHEN THE ISSUE CAME UP BEFORE LD.C IT(A) CERTAIN DETAILS ALONG WITH THE LEDGER STATEMENTS WERE FILED BY THE ASSESSEE ON THE BASIS OF WHICH THE ADDITION FOR UNACCOUNTED EXP ENDITURE OF RS.10,85,100/- WAS DELETED BY LD. CIT(A) OBSERVING AS FOLLOWS; 1L.2 PAGE 185 & 186 OF BS-1 ALSO SEIZED DURING THE SEARCH CONTAINS DETAILS OF VARIOUS PAYMENTS MADE ON A SINGLE DAY. ON PERUSA L OF THE LEDGER STATEMENT OF VARIOUS BENEFICIARIES FILED THE FOLLOW ING PAYMENTS ARE SEEN:- RS 34,633/- HAS BEEN PAID TO M/S KHYATI ENTERPRIS ES ON 28 09 2012 RS 4,00,000/- (RS.2,00,000/- & RS 2,00,000/- EACH ) TO M/S BINANI PUMPS AND PIPES ON 28.09.2012. SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 121 RS 1,97,000/- HAS BEEN PAID TO M/S TILES GALARY O N 28.09.2012. RS. 49,500/-_ HAS BEEN PAID TO RAJU RAM SAINI ON 28.09.2012 RS 2,56,160/- PAID TO M/S SHUBHAM ENTERPRISES ON 28 09.2012 & RS 1,48,500/- FROM THE ABOVE IT IS VERY CLEAR THAT THE ABOVE' PAY MENTS HAVE BEEN DULY RECORDED IN THE BOOKS OF ACCOUNT OF APPELLANT COMPA NY AND ALL TRANSACTIONS HAVE BEEN IN MADE ON SINGLE DAY BY THE A.O ON THIS ACCOUNT ARE DELETED. 11.3 IN VIEW OF THE ABOVE DISCUSS ION ADDITIONS OF RS 10,85,100/- ALL THE TRANSACTIONS ARE DULY REFLECTED IN THE HOOKS OF ACC OUNT OF THE APPELLANT COMPANY AND THE ADDITION MADE BY THE A 0 ON THIS AC COUNT IS ACCORDINGLY DELETED. 100. THE ABOVE FINDING OF FACT BY LD.CIT(A) HAS N OT BEEN REBUTTED BY LD. DEPARTMENTAL REPRESENTATIVE AND IT IS FAIRLY DISCERNABLE FROM RECORDS THAT ALL THE TRANSACTIONS APPEARING IN THE SEIZED DOCUMENT AT PAGE 185 AND 186 HAVE BEEN DULY EXPLAINED BY THE AS SESSEE AND THEY HAVE DIRECT BEARING WITH THE REGULAR BUSINESS ENTER ED AND THEREFORE NO INTERFERENCE IS CALLED FOR DELETING THE ADDITION OF RS.10,85,100/-. WE ACCORDINGLY DISMISS THIS ISSUE RAISED BY THE REV ENUE. 101. IN THE RESULT APPEALS OF THE ASSESSEE FOR ASSE SSMENT YEARS 2007-08, 2008-09, 2009-10 AND 2010-11 ARE ALLOWED, APPEALS OF SOUMYA HOMES PVT. LTD IT(SS) NOS.124 TO 129/IND/2017 & I.T.NO.317/IND/201 7 IT(SS) NOS.141 TO 146/IND/2017 & I.T.NO.342/IND/201 7 122 ASSESSEE FOR ASSESSMENT YEAR 2012-13 AND 2013-14 A RE PARTLY ALLOWED, APPEAL OF THE ASSESSEE FOR A.Y. 2011-12 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ALL THE APPEALS OF THE REV ENUE FOR A.Y. 2007- 08 TO A.Y. 2013-14 ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 24.01.2 019 SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 24 JANUARY, 2019 /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