THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, RAIPUR V. M/S JAINAM BUILDERS PVT. LTD., RAIPUR

ITSSA 4/RPR/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3312 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-08-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 14-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT M JAIN
• Keywords: Depreciation; Search and seizure; Loose papers; Document seized; Documents seized
• Section: 143(3); 153A; 13; 22

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं./ IT(SS)A Nos. 03 & 04/RPR/2017 Ǔनधा[रण वष[ / Assessment Years : 2012-13 & 2013-14 The Assistant Commissioner of Income Tax, Central Circle-1, Raipur (C.G.) .......अपीलाथȸ / Appellant बनाम / V/s. M/s. Jainam Builders Pvt. Ltd. 32, Aashirwad Towers, Near Raj Talkies, G.E. Road, Raipur (C.G.) PAN : AABCJ4511D ......Ĥ×यथȸ / Respondent Assessee by : Shri Amit M Jain, CA Revenue by : Shri Sanjay Kumar, CIT DR 2 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 स ु नवाई कȧ तारȣख / Date of Hearing : 26.07.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 04.08.2022 आदेश/ ORDER PER RAVISH SOOD, JM : The present appeals filed by the revenue are directed against the consolidated order passed by the CIT(Appeals)-1, Raipur, dated 17.08.2017, which in turn arises from the respective orders passed by the A.O under Sec.153A r.w.s. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 19.03.2016 for assessment years 2012-13 & 2013-14. As common issues are involved in the captioned appeals, therefore, the same are being taken up and disposed off by way of a consolidated order. We shall first take up the appeal filed by the revenue for the assessment year 2012-13 wherein the impugned order has been assailed on the following grounds of appeal before us: “a. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs.4,99,45,667/- made by the Assessing Officer u/s.69A of the Income Tax Act on account of 3 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 receipt of “on money” from various purchasers for which no income has been booked by the assessee particularly when the evidences gathered and statement recorded u/s.132(4) of the IT Act give clear indication of receipt of “on money’. b. Any other ground that may be adduced at the time of hearing.” 2. Search and seizure proceedings were conducted on Wallfort group u/s.132 of the Act on 10.01.2014. Notice(s) u/s.153A of the Act dated 22.04.2015 were issued to the assessee company calling upon it to furnish its return(s) of income for the assessment year(s) 2008-09 to 2013-14. In compliance, the assessee company filed its returns of income for the aforesaid years as under: AY Date of filing of return u/s.139(1) Returned income against u/s.139(1) Date of filing of return by the assessee against notice u/s.153A Income declared in return u/s.153A(Rs.) Additional income offered by the assessee (in Rs.) 2008-09 28.09.2008 3,40,970/- 25.05.2015 3,40,970/- 0 2009-10 30.09.2009 85,820/- 25.05.2015 69,310/- *(16,510/-) 2010-11 11.10.2010 5,76,690/- 25.05.2015 7,76,590/- **1,99,900/- 2011-12 29.09.2011 1,85,070/- 25.05.2015 1,85,070/- 0 2012-13 28.09.2012 2,05,750/- 25.05.2015 2,05,750/- 0 2013-14 28.09.2013 NIL 25.05.2015 NiL 0 4 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 2014-15 31.07.2015 12,91,310/- N.A N.A 0 * Variation on account of depreciation. ** There is mistake in return filed u/s.153A wherein depreciation has been wrongly claimed. This resulted in difference of total income.” 3. During the course of the assessment proceedings, it was, inter alia, submitted by the assessee that in those years where assessment proceedings had remained unabated and no incriminating documents were seized, no addition/disallowance was liable to be made. However, the aforesaid claim of the assessee was rejected by the A.O. Rebutting the aforesaid claim, it was observed by the A.O that though the income of the assessee might have earlier been processed or assessed under Sec. 143(1)(a) or Sec. 143(3) of the Act, the A.O would be required to reopen the proceedings and reassess the total income. In sum and substance, it was observed by the A.O that any addition/disallowance made in the course of the proceedings u/s.153A of the Act would be valid and lawful and cannot be restricted or limited to the incriminating material 5 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 even though the case might have been assessed u/s. 143(3) of the Act. 4. Adverting to the facts involved in the case of the assessee for the assessment year 2012-13, it was observed by the A.O that the assessee had, inter alia, during the year in question received share application money and share premium from its sister concerns, as under: Observing, that as the assessee had satisfactorily discharged its onus of establishing the identity, creditworthiness and genuineness of the aforesaid transactions i.e., receipt of share application money from the aforesaid sister concerns, the A.O did not draw any adverse inferences qua the said transactions and accepted the same. On perusal of the records, it was A.Y. Name of the share holder Amount 2012-13 Semec Leasing & Marketing Pvt. Ltd. Raipur 3,52,00,000 2013-14 Jainam Properties Pvt. Ltd. 4,80,00,000 2013-14 Moolchandani Leasing & Finance Pvt. Ltd., Raipur 4,65,00,000 2013-14 JainamAgro& Finance Pvt. Ltd., Raipur 1,80,00,000/- 6 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 observed by the A.O that during the course of search conducted on Wallfort group certain vital documents were seized from the residential premises of Shri Narayan Prasad Toshniwal and Shri Sanjay Golecha who were the key persons of the marketing and sales division of the said group. On a perusal of the documents seized in the course of search proceedings from the aforementioned persons, it was observed by the A.O that the same pertained to the sale transactions of various ongoing projects of Wallfort Group. On scrutinizing the contents of the seized documents, it was noticed by the A.O that the same revealed the actual selling rates of the properties of the various projects of the Wallfort group. Also, it was noticed by the AO that the aforesaid sale rates that had surfaced on a perusal of the incriminating documents seized in the course of the search proceedings were well in tune with the information that was gathered on the basis of discreet pre-search investigations carried out by the department. It was observed the A.O that the documentary evidence in the form of brochures, hand written 7 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 notes describing selling price and audio recordings of conversation of key employees of the group as was collected by the DDIT(Investigation), Raipur prior to the search proceedings supported the sale rates of the properties as was revealed by the incriminating documents seized in the course of the search proceedings. Adverting to the modus operandi that was adopted by aforesaid group concerns, it was observed by the A.O that Shri Narayan Prasad Toshniwal and Shri Sanjay Golecha, key persons of the marketing and sales division of the group, had in their statements recorded in the course of search and seizure proceedings stated that the sale consideration comprised of two parts, viz. (i) cash portion i.e. ‘on-money’; and (ii) cheque + cash i.e. actual sale value as was recorded in the books of account. On the basis of the aforesaid facts that were divulged by Shri Narayan Prasad Toshniwal (supra), it was observed by the A.O that utmost precaution was taken by the aforesaid group entities for not leaving any evidence of on-money that was received on sale of properties of its various on-going projects. As 8 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 stated by the aforesaid persons, it was observed by the A.O that the aforesaid group entities would not enter into any agreement with the purchaser of a property till complete payment of on- money as negotiated would be paid by him. Also, it was observed by the A.O that no receipt for the cash payments received from customers towards on-money was issued, and in case if any such receipt was issued, then, the same prior to the execution of agreement would be taken back and destroyed. As such, as per the facts divulged by the aforesaid persons regarding the modus operandi that was adopted by the aforesaid group entities, it was noticed by the A.O that a registered sale deed would be executed in favour of the purchaser of the property only after the entire amount (including on-money) was received from them. Referring to the incriminating material that was seized during the course of search proceedings, it was observed by the A.O that total 89 evidences were unearthed, which established receipt of on-money by the various group companies. Also, it was noticed by the A.O that prior to the 9 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 search and seizure proceedings the DDIT (Inv.), Raipur disguising as a customer had visited the premises of the group entities and had enquired about the rates of the properties. It was observed by the A.O that the trusted employees of the group who were looking after the marketing and sales division of the properties of the various projects of the aforesaid group had in their handwriting provided rates of the various properties to the DDIT (Inv.), Raipur (disguised as a customer). Apart from that, it was noticed by the A.O that the DDIT (Inv.), Raipur had also recorded the conversations of the aforesaid key employees, viz. Shri Narayan Prasad Toshniwal and Shri Sanjay Golecha, which evidenced the demanding of “on money” by them qua the sale of properties of the various on-going projects of the aforesaid group. Referring to the evidences which were unearthed in the course of the search proceedings that established the receipt of on money, it was observed by the A.O that there were total 13 such evidences based on the conversations of the aforementioned key employees that was 10 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 recorded during the pre-search proceedings which substantiated the demanding of on money by them, as under: S. No. Nature of evidence Importance of the evidence 2. Rates given by Sh. Sanjay Golecha in his hand writing in May, 2011 These rates are for Wallfort Enclave.There is substantial difference in the rates shown in the registry and the rates actually charged from the customer. 3. Rates given by Shri Sanjay Golecha in his hand writing in August, 2011 These rates are for Wallfort Enclave-I & II. There is substantial difference in the rates shown in the registry and the rates actually charged from the customer. 4. The recorded conversation between DDIT and Sanjay Golecha As per this conversation, the group is charging on money in cash for sale of its properties. 6. Rates given by Shri Narayan Toshniwal in his handwriting in May, 2011 There is substantial difference in the rates shown in the registry and rates actually charged from the customer. 7. The recorded conversation between DDIT and Narayan Prasad Toshniwal As per this conversation, the group is charging on-money in cash for sale of its properties. 8. The recorded conversation between one customer and shri Sanjay Golecha in March, 2014 As per this conversation, the group is charging on-money in cash for sale of its properties. Also, it was observed by the A.O that there were 76 more evidences which were seized during the course of search and seizure proceedings which evidenced that the aforesaid group 11 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 entities were charging on-money on sale of properties of its various projects, as under: Evidence No. Title Reference No of seized documents 29. Kachhahisab regarding Vivek related to flat selling in Wallfort Sapphire Project (P-32) BS-A-1/Page 23 (back side) 36. Kachhahisab regarding Prashant and Shalik related to flat selling in Wallfort Sapphire Height (P-32) BS-A-1/Page 27 (back side) 37. Kachhahisab regarding Brajkishore Sharda related to flat selling in Wallfort Wood (P-32) BS-A-1/Page 27 (back side) 38. Kachhahisab regarding Narayan Prasad Toshniwal related to flat selling in Wallfort Enclave-I & II (P-32) BS-A-1/Page 28 50. Kachhahisab regarding Narayan Toshniwal regarding cash transations (P-32) BS-A-1/Page 45 On a perusal of the aforesaid evidences that were either gathered in the course of the pre-search investigations carried out by the DDIT (Inv.), Raipur; or had surfaced in the course of search and seizure proceedings itself, the A.O held a conviction that the aforesaid group entities were charging on-money on sale of properties forming part of its on-going projects. On a perusal of the details, it was observed by the A.O that the sale consideration received in respect of 5 on-going projects that 12 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 were sold by the aforesaid group, viz. Wallfort Group was as under: 1. Wallfort City - 47.89 crores 2. Wallfort Enclave-I - 14.19 crores 3. Wallfort Enclave-II - 17.83 crores 4. Wallfort Ozone - 10.11 crores 5. Wallfort Orchid - 10.30 crores Total 100.32 crores Considering the aforesaid sale consideration, the A.O on an estimate basis worked out on-money receipt by the entire group at Rs. 100.32 crores i.e, @100% of its disclosed sales. Accordingly, on the basis of aforesaid estimation the A.O worked out the on-money receipts of the 5 completed projects of the group, as under: Project Name of the company in which the said project was built Value shown in the registry ( in Rs.) On money estimated @100% of sale value ( in Rs.) Wallfort City Chhattisgarh Projects (I) Pvt. Ltd. 49.89 crores 49.89 Wallfort Enclave-I Chhattisgarh Projects (I) Pvt. Ltd. 17.83 crores 17.83 Wallfort Enclave-II Chhattisgarh Projects (I) Pvt. Ltd. 14.19 crores 14.19 Wallfort Ozone Wallfort Properties 10.11 crores 10.11 13 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 Pvt.Ltd. Wallfort Orchid Wallfort Properties Pvt.Ltd. 10.30 crores 10.30 Total on-money estimated 100.32 Crores 100.32 crores Out of the aforesaid projects, as only one project, viz. Wallfort Orchid belonged to the assessee before us i.e M/s Jainam Builders Pvt. Ltd., therefore, the A.O on the basis of his aforesaid proposed estimation worked out the on-money receipt in respect of the said project at Rs.10.30 crores. Further, on a perusal of the financial results of the assessee company, it was observed by the A.O that its revenue receipt from sale of flats over the period from A.Y.2008-09 to 2014-15 aggregated to Rs.11,51,49,940/-, as under :- A.Y. Sale of Flat (Rs.) 2008-09 0 2009-10 0 2010-11 0 2011-12 90,03,944/- 2012-13 5,58,37,287/- 14 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 Observing, that as the assessee had received on-money of Rs.10.30 crores (supra) from various purchasers, the A.O on a pro-rata basis distributed the said receipt over the aforesaid period i.e. AY 2008-09 to AY 2014-15, as under:- A.Y. Sale of flat % of sale with respect to total sale for A.Y.2008-09 to A.Y.2014-15 On money addition made with respect to % of sale 2008-09 2009-10 0 0 0 2010-11 0 0 0 2011-12 90,03,944/- 7.8193215 80,53,901/- 2012-13 5,58,37,287/- 48.490939 4,99,45,667/- 2013-14 5,03,08,709/- 43.68974 4,50,00,432/- 2014-15 0 0 0 Total 11,51,49,940/- 100 10,30,00,000 Accordingly, the A.O on the basis of his aforesaid deliberation made addition of Rs. 4,99,45,667/- u/s.69 of the Act in the 2013-14 5,03,08,709/- 2014-15 0 15 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 hands of the assessee company for the year under consideration i.e AY 2012-13. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). Before the CIT(Appeals) the assessee assailed the validity of the jurisdiction that was assumed by the A.O. It was the claim of the assessee that now when no incriminating material was seized in the case of the assessee for the year under consideration, therefore, no addition as regards its unabated assessment for the said year could have been validly made by the A.O. Also, the assessee assailed the sustainability of the addition made by the A.O qua the merits on multiple grounds, viz. (i). that the AO had drawn adverse inferences on the basis of certain pre-search investigations which did not pertain to the project of the assessee company i.e. Wallfort Orchid, but was glaringly in context of projects of its sister concerns, viz. (a) Chhattisgarh Projects (I) Pvt. Ltd. and (b). Wallfort Properties Pvt. Ltd.; (ii). that the pre-search investigation details and information gathered by the 16 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 department which was though used against the assessee for drawing adverse inferences was never confronted to the assessee; (iii). that even otherwise the incriminating documents i.e the alleged loose papers gathered in the course of pre-search proceedings were neither seized from the possession of the assessee nor from its premises; (iv). that the aforementioned persons, viz. Shri Narayan Prasad Toshniwal and Shri Sanjay Golecha whose statements/conversations was heavily relied upon by the AO for drawing adverse inferences in the case of the assessee were not the employees of the assessee company; (v). that the tape recorded conversations referred to by the A.O in his order had no sanctity in the eyes of law and even otherwise pertained to other two group entities, viz. (a) Chhattisgarh Projects (I) Pvt. Ltd.; and (b) Wallfort Properties Pvt. Ltd.; (vi). that the alleged tape recorded conversations was not relied upon by the department in the course of the proceedings before the Settlement Commission, Kolkata in the case of the aforesaid two sister concerns to which the same 17 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 pertained; (vii). that there were overwhelming seized evidences which proved that the actual sale price realized by the assessee company on the sale of flats of its solitary project i.e. Wallfort Orchid was at par with the sale realization that was accounted for in its books of account.; (viii). that the verifications made by the A.O from the purchasers of the flats of Wallfort Orchid by issuing notices u/s.133(6) of the Act to them proved to hilt that the sale proceeds of the said flats was duly recorded in its books of account; (ix). that the loose papers seized during the course of search proceedings did not pertain to the assessee company but pertained to its sister concern, viz. Wallfort Properties Pvt. Ltd.; (x). that even otherwise the A.O had not raised any query as regards the contents of the seized loose paper, viz. BS-A-1 which pertained to Wallfort Properties Pvt. Ltd.; (xi). that though the aforesaid loose paper, viz. BS-A-1 was not seized from either of the premises of the asessee company i.e. Ashirwad Tower Ozone or Wallfort City, but the same had most arbitrarily been used for drawing adverse inferences in its hand; 18 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 and (xii). that in the course of the proceedings before the Settlement Commission, Kolkata in the case of the aforementioned two sister concerns of the assessee, the department had categorically stated that the tape recorded conversations were related to the said two sister concerns, viz. (i) Chhattisgarh Projects (I) Pvt. Ltd. and (ii) Wallfort Properties Pvt. Ltd., but the A.O had most arbitrarily used the same for drawing adverse inferences in the case of the assessee. 6. On a perusal of the order of the CIT(Appeals), we find that in so far the claim of the assessee that the A.O in absence of any incriminating document having been found in the course of the search proceedings was divested of his jurisdiction from making any addition/disallowance in case of an unabated assessment, the CIT(Appeals) while disposing off the assessee’s appeal for a preceding year i.e A.Y.2010-11, had after relying on certain judicial pronouncements concurred with its aforesaid claim and vide his consolidated order observed as under: 19 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 “3.3 Before proceeding into the merits of the additions, I will deal with the assessee's objection regarding jurisdiction u/s 153A in AY 2010-11. The assessment u/s 143(3) in the regular proceedings was completed on 30/03/2013 whereas search and seizure operation took place on 10/01/2014. Therefore, the assessment will not abate in this case. AO should only consider the issues arising out of seized material if any. The issue of receipt of share capital of Rs. 25 lakhs was already considered in the assessment completed on 30/03/2013. No incriminating document was found and mentioned in the assessment order during search operation. When an issue has reached finality i.e. no further appeal has been filed by assessee or Revenue on an issue decided by AO or an appellate authority, and assessment is again taken up/ reopened due to some reason, not connected with the issued which reached finality, that issue cannot be again raised by the assessee. [Commissioner of Income-tax v. Sun Engineering Works P. Ltd.[1992] 198 ITR 297 (SC)] and No addition can be made in respect of assessment which have become final, unless incriminating material has been found in search operation. [ Continental Warehousing Corporation [2015] 58 taxmann.com 78 (Bombay) Commissioner of Income Tax-II, Thane V. Continental Warehousing Corporation (Nhava Sheva) Ltd. S.C. Dharmadhikari And A.K. Menon, JJ IT Appeals Nos. 523 & 1969 of 2013.” However, it transpires that the CIT(Appeals) had failed to adjudicate the aforesaid grievance of the assessee for the year under consideration i.e. A.Y.2012-13. Insofar the clam of the assessee that no addition qua the merits of the case was called for in the hands of the assessee was concerned, the CIT(Appeals) found favour with the same and vacated the addition made by the AO. 20 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 7. Aggrieved, the Revenue has assailed the order of the CIT(Appeals) before us. 8. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Before proceeding any further, we shall first deal with the observations of the CIT(Appeals) on the basis of which he had vacated the addition of Rs.4,99,45,667/- made by the A.O during the year under consideration. On a perusal of the order of the CIT(Appeals), we find that he had after giving a thoughtful consideration to the multiple contentions that were advanced by the assessee before him, vacated the addition of Rs.4,99,45,667/- that was made by the AO by observing as under: “4.3 Facts being as above. After going through the relevant part of the assessment order and considering assessee's submission, it is seen that additions have been made on the basis of loose papers in AYs 2011-12, 2012-13 and 2013-14. These loose papers pertains to Wallfort Properties Pvt. Ltd and not the assessee. On the basis of these loose papers found from Wallfort Properties the AO has drawn 21 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 similar inference in the, case of the assessee for which there are no supporting facts. A query letter dated 09/10/2015 was issued which also did not contain any question regarding the loose papers BS-A-1 which0 were never confronted to the assessee. These loose papers were also not seized from assessee's office at Ashirwad Towers, Ozon or Wallfort city. On page 22 of the assessment order AO has estimated "on money" @100 percent of sale value. There is no basis for adopting 100 percent for "on money" transaction. If this figure has been suggested in the appraisal report there is no fact on the assessment order that any evidence was found during the search. The assessment of Wallfort Properties Pvt Ltd has been disposed off by Hon'ble ITSC. The group had offered income of Rs. 7.05 crores which included the income offered by Chhattisgarh Project (India) Pvt Ltd and Wallfort Properties Pvt Ltd. Final order has been made at Rs. 12 crores after considering all the facts and documents. Page 21 of the assessment order discusses loose paper BS-A-1 page 23 (back side) relating to WallfortSaphire Project which is owned by Wallfort Properties Pvt Ltd and not the assessee. Loose paper BS-A- 1 page 27 (back side) contains details of Wallfort heights which is a project of Wallfort Properties Pvt Ld and not the assessee. A total of 100.32 cores turnover has been mentioned at page 22. Out of these projects only the Wallfort Orchid belongs to assessee. All other projects belong to Chhattisgarh Project (India) Pvt Ltd and Wallfort Properties Pvt Ltd which have gone to Settlement Commission. Thus the addition has been made without any incriminating documents. Against the turnover of Rs. 90 cores (100.32 — 10.30) the final order of the ITSC is at Rs. 12 crores. AO has also relied upon the recorded conversation which were not relied upon by the AO before the ITSC. In fact before the ITSC it was stated on behalf of the Department that it is not relying on recorded conversation. Even if there is mention of on-money in these conversation, firstly there is no evidence that the conversation related to a project own by assessee company and secondly these conversation have not been relied upon by the department. Against the above recorded conversation which was not relied by the Department the assessment in the case of the assessee is totally based on such conversation and that too not in the case of the assessee but in the case of other parties which have gone into Settlement Commission. Thus the addition has been made without any incriminating documents and needs to be deleted. In order to base the additions on recorded conversations, the recordings must be handled in such a way that these are acceptable in court. The tap must be sealed at the earliest point of time and not opened except under orders of the court. The time, place and accuracy of the recording must be proved by a competent witness and the voice 22 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 must be properly identified. Thus a heavy burden is cast upon the departmental authorities for using the recorded conversations. None of these actions have been taken due to which these recordings are not an admissible evidence. Moreover the recordings are not in the case of the assessee. Thus, the addition is without any supporting material and is therefore deleted. Assessee's ground is allowed. 9. As stated by the Ld. Authorized Representative (for short ‘AR’), and rightly so, it is a matter of fact borne from record that the aforesaid group, viz. Wallfort group comprises of three core companies, viz. (i) M/s. Jainam Builders Pvt. Ltd. (i.e the assessee company); (ii) M/s Chhattisgarh Projects (I) Pvt. Ltd.; and (iii). M/s Wallfort Properties Pvt. Ltd. All of the aforesaid group entities are engaged in the business as that of a builder and developer. On a perusal of the orders of the lower authorities, we find that the A.O had, inter alia, drawn adverse inferences in the hands of the assessee by heavily relying on the pre-search investigations carried out by the investigation wing of the department. On a perusal of the records, it transpires that the DDIT (Inv.), Raipur disguised as a customer had visited the premises of the aforesaid group entities and had enquired about the rates of the properties of its various ongoing projects. 23 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 As is discernible from the orders of the lower authorities, the statements of two key employees of the groups marketing and sales division, viz. Shri Narayan Prasad Toshniwal and Shri Sanjay Golecha were recorded in the course of the search proceedings. In their respective statements the aforesaid persons are stated to have divulged the modus-operandi of the group entities, which revealed that they were in normal course of their business in receipt of on-money i.e sale consideration over and above that recorded in the sale agreement. At this stage, we may herein observe that it is the claim of the assessee that none of the aforesaid persons was its employee, but in fact were the employees of its sister concerns, viz. (i) M/s Chhattisgarh Projects (I) Pvt. Ltd.; and (ii) M/s Wallfort Properties Pvt. Ltd. Apart from that, we find substance in the claim of the Ld. AR that neither of the said persons had ever alleged that the assessee company had received on-money on sale of flats forming part of its project, viz. Wallfort Orchid. Adverting to the pre-search enquiries carried out by the DDIT 24 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 (Inv.), Raipur, we find that the 13 evidences (supra) which have been referred to by the A.O in the body of the assessment order refers to the details which were gathered on the basis of conversations with the aforementioned persons, viz. Shri Narayan Prasad Toshniwal and Shri Sanjay Golecha, who as observed by us hereinabove were not the employees of the assessee company. Apart from that, a perusal of the nature of evidences as had been mentioned in the body of the assessment order, reveals, that the same pertains to a project, viz. Wallfort Enclave (I) & (II) i.e. a project not belonging to the assessee company but to its sister concerns, viz. (i) Chhattisgarh Projects (I) Pvt. Ltd. and (ii) Wallfort Properties Pvt. Ltd.; or makes general references of receipt of on-money on sale of property. As observed by us hereinabove, now when neither of the aforementioned persons, viz. Shri Narayan Prasad Toshniwal and Shri Sanjay Golecha are the employees of the assessee company, nor any allegation had been raised by them in their respective statements as regards receipt of on-money by 25 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 the assessee company or otherwise qua its project, viz. Wallfort Orchid, therefore, no adverse inference on the basis of the same could have been validly drawn in the hands of the assessee company. 10. Adverting to the 76 more evidences (some of which had been reproduced by the A.O in the body of the assessment order), we find that the same are stated to be extracts of a document seized in the course of search proceedings, viz. BS-A- 1 i.e. a loose paper. At this stage, we may herein observe that as the aforesaid incriminating document, viz. BS-A-1 was not found from the business premises of the assessee company before us, i.e Ashirwad Tower, Ozone or Wallfort City, therefore, as per the mandate of Sec. 292C and Sec. 132(4A) of the Act, the contents of the said seized document could not have been summarily used for drawing of adverse inferences in its hands. Be that as it may, as observed by the CIT(Appeals), we find that the contents of the aforesaid loose papers did not pertain to the assessee company but pertain to its sister concern, viz. M/s 26 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 Wallfort Properties Pvt. Ltd. At this stage, we may herein observe that the A.O had most arbitrarily drawn adverse inferences on the basis of the contents of the aforesaid seized document, viz. BS-A-1 not only by loosing sight of the fact that the same was not seized during the course of search proceedings from the business premises of the assessee company, but also that the same did not refer to the latter’s business affairs. Apart from that, we find that the AO had grossly erred and acted in breach of the cannons of natural justice by drawing adverse inferences without confronting the aforesaid seized document, viz. BS-A-1 to the assessee, as a result whereof the latter had remained divested of an opportunity of putting forth any explanation as regards the same. 11. As regards the tape recorded conversation of the employees of the group entity, viz. Wallfort Properties Pvt. Ltd. as had been relied upon by the A.O for drawing adverse inferences in the hands of the assessee company, we find substance in the claim 27 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 of the Ld. AR that the said tape recorded conversation lacked evidentiary value for three fold reasons, viz. (i) voice of the persons alleged to be speaking had not been identified by maker of the record; (ii) that nothing had been placed on record which could substantiate that recording of the conversation had not been tampered with; and (iii) that the subject matter recorded had not been shown to be relevant as per Indian Evidence Act. Apart from that, the claim of the assessee that the contents of the aforesaid tape recorded conversion did not pertain to it and in fact pertained to its sister concerns, viz. (i). M/s Chhattisgarh Projects (I) Pvt. Ltd. and (ii). M/s Wallfort Properties Pvt. Ltd. i.e. group companies, had in itself been admitted by the department before the Settlement Commission, Kolkata, wherein the latter had observed that the department was relying on the recorded conversations in respect of the matters pertaining to the aforesaid two concerns. 12. Be that as it may, we find that there is nothing available on record which would reveal that anywhere in the tape 28 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 recorded conversation that was relied upon by the A.O there was any allegation as regards the receipt of on-money by the assessee company before us. On the contrary, we find substantial force in the claim of the Ld. AR that overwhelming documentary evidences were found and seized during the course of the search proceedings which proved to the hilt that the sale consideration realized by the assessee company on sale of the flats of its project, viz. Wallfort Orchid was duly recorded in its books of account. Our aforesaid observation stands fortified from a perusal of the submissions of the assessee which had not been rebutted by the Department before the CIT(Appeals), wherein, he had referred to certain seized documents, viz. P-14, P-17 and P-36 which revealed that the sale price as per seized record was duly recorded by the assessee in its books of account, as under: Ref. to seized LPS Name of customer with Flat no. Sale price as per seized record Sales realization as per account Remark P-14/LPS-1/Page 16 Smt. Vimala Agrawal Flat No. B- 102, Wallfort Orchid 15,75,000/- 15,75,000/- F.Y.2010-11. There is no on money 29 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 P-17/LPS-2/Page 20 Smt. Deepa Sethia, Flat No. A-408, Wallfort Orchid 16,25,000/- 16,25,000/- F.Y.2011-12. There is no on money P-36/BS-1/Page 3 Rajkumar Uttamani Flat No.B-302, Wallfort Orchid 19,50,000/- 19,50,000/- F.Y.2012-13. There is no on money Also, it is a matter of fact borne from the record that the A.O had in the course of the assessment proceedings carried out verifications from purchasers of the flats by issuing notice u/s.133(6) of the Act, and the said persons had duly confirmed the sale price accounted for by the assessee in its books of accounts, as under: Name of purchasers of flats at Wallfort Orchid Date of notice issued u/s.133(6) Date on which information submitted by purchasers Remark Ramesh Nathani& Vikram Nathani Shankar Nagar, Raipur Flat No.A-404 06.11.2015 28.01.2016 Sale price confirmed at Rs.17,00,000/-( F.Y.2012- 13) Smt. MeghaGoell, Jeevan Parisa, Rajiv Nagar, Raipur, Flat A-301 06.11.2015 01.12.2015 Sale price confirmed at Rs.18,25,000/-( F.Y.2012- 13) Smt. Madhu Tibrewal, Anuvrat Residency, Pandri, Raipur, Flat A-406 06.11.2015 27.01.2016 Sale price confirmed at Rs.16,30,000/-( F.Y.2011- 12) Udita Malik, Flat No.104, Park Residency Telibandha, Raipur, Flat No. A-308 25.01.2016 16.02.2016 Sale price confirmed at Rs.16,25,000/-( F.Y.2011- 12) Mahendra Singh Saluja, UpasnaSadan, Narbadapara, Raipur, Flat B-204 25.01.2016 08.02.2016 Sale price confirmed at Rs.17,01,000/-(F.Y.2011- 12) 30 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 Nidhi Daga, Gandhi Chowk, Arang, Raipur, Flat A-201 25.01.2016 08.02.2016 Sale price confirmed at Rs.17,25,000/- (F.Y.2011- 12) Rajkumar Uttamani, 15/270, Jawahar Nagar, Raipur, Flat No.B-302 25.01.2016 08.02.2016 Sale price confirmed at Rs.19,50,000/- (F.Y.2012- 13) Ramesh Kumar Uttamani, 15/270, Jawahar Nagar, Raipur, Flat No. B-302 08.02.2016 Sale price confirmed at Rs.19,50,000/- (F.Y.2012- 13) Kishanlal Maheshwari, B.N Traders & Agencies, Narmadapara, Raipur 08.02.2016 Sale price confirmed at Rs.17,25,000/- (F.Y.2012- 13) Preeti Mishra, 54/957, SatyapremVihar, Mahadev Ghat Road, Raipur 25.01.2016 16.02.2016 Sale price confirmed at Rs.11,36,000/-( F.Y.2010- 11) Ruchi Mishra, SatyapremVihar, Mahadev Ghat Road, Raipur 06.11.2015 11.12.2015 Sale price confirmed at Rs.11,36,000/-( F.Y.2010- 11) On the basis of the aforesaid facts, we are of a strong conviction that there is nothing made available on record by the department which would substantiate its claim that the assessee company was in receipt of on-money on sale of flats of its project, viz. Wallfort Orchid. On the contrary, the documentary evidences relied upon by the assessee duly substantiates its claim that the sale consideration received by it from its customers was duly recorded in its books of account. Also, the fact that the contents of the seized documents, viz. viz. P-14, P-17 and P-36 and the verifications carried out by the A.O 31 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 u/s.133(6) of the Act, therein substantiates the claim of the assessee of having accounted the sale consideration of the flats of its project, viz. Wallfort Orchid in its books of account. At this stage, we may herein observe that the claim of the assessee that the A.O had drawn adverse inferences by referring to certain pre-search information and contents of seized documents, neither of which pertain to or was relatable to the assessee company but was in the context of its sister concerns had also not been rebutted by the Ld. DR before us. 13. On the basis of our aforesaid observations, we find no infirmity in the view taken by the CIT(Appeals) who had rightly concluded that in the absence of any supporting material the adverse inferences drawn by the AO could not be sustained. Also, without prejudice to our aforesaid observation, we are also unable to comprehend the very basis for working of on-money receipts i.e @ 100% of disclosed sales of the assessee. In the backdrop of the aforesaid facts and circumstances, we are of the considered view that as the addition towards receipt of on- 32 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 money in the hands of the assessee company had been arrived at by the A.O on the basis of contents of the documents which were not related to the assessee, hence, the addition so made by him on the basis of baseless assumptions, presumptions, surmises and conjectures which have not legs to stand upon had rightly been vacated by the CIT(Appeals). We, thus, in terms of our aforesaid observations uphold the well reasoned order of the CIT(Appeals). 14. In the result, appeal of the Revenue in ITA No.03/RPR/2017 for the assessment year 2012-13 is dismissed in terms of our aforesaid observations. ITA No.04/RPR/2017 A.Y.2013-14 15. As the facts and the issues involved in the present appeal of the revenue remains the same as were there before us in its aforementioned appeal in ITA No.03/RPR/2017 for assessment year 2012-13, therefore, our order therein passed while disposing off the said appeal shall apply mutatis-mutandis for 33 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 disposing off the present appeal in ITA No.04/RPR/2017 for the assessment year 2013-14. Accordingly, in this case also the grounds raised by the revenue are dismissed. 16. In the result, appeal of the Revenue in ITA No.04/RPR/2017 for the assessment year 2013-14 is dismissed in terms of our aforesaid observations. 17. Resultantly, both the appeals of the Revenue are dismissed in terms of our aforesaid observations. Order pronounced in open court on 04 th day of August, 2022. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 04 th August, 2022 SB 34 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1,Raipur (C.G) 5.ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु रबɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकरअपीलȣयअͬधकरण, रायप ु र / ITAT, Raipur. 35 ACIT, Central Circle-1 Vs. M/s. Jainam Builders Pvt. Ltd. IT(SS)A Nos.03 & 04/RPR/2017 Date 1 Draft dictated on 26.07.2022 Sr.PS/PS 2 Draft placed before author 26.07.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order