The ACIT, Central Circle-3, Vadodara V. M/s. Sphere Cube Infrastructure Pvt. Ltd., Vadodara

ITSSA 74/AHD/2021

AI Insights

The case involves multiple appeals by both the Revenue and the assessee against the orders of the Commissioner of Income Tax (Appeals) concerning the assessment years 2011-12 to 2015-16. The primary issues revolved around the addition of on-money received from the sale of shops and the addition under Section 68 concerning unsecured loans from M/s. Blackberry Ventures Pvt. Ltd. The Income Tax Appellate Tribunal examined the evidences, including seized documents and statements from key persons, and considered various judicial precedents before arriving at its decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114273 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-06-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-05-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 10-06-2021
• Other Referred Cases: Chetnaben J. Shah vs. CIT, M. P. Scrap Traders vs. CIT, Chandrakumar Jethmal Kochar vs. CIT, CIT vs. Ayachi Chandrashekhar Narsangji, CIT vs. Maulikkumar K. Shah, ITO vs. Shanti Enterprise, ACIT vs. BVPL, Padmavati Housing Corporation vs. DCIT, Abhishek Corporation vs. DCIT, DCIT vs. Adarsh Industrial Estate P Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Principle of natural justice; Question of law; Accommodation entries; Assessment record; Onus to prove; Retraction; Documents seized; Set aside
• Section: 131; 68; 132; 143(3); 153A; 205; 251; 73; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The ACIT, Central Circle-3, Vadodara (Appellant) Vs M/s. Sphere Cube Infrastructure Pvt. Ltd., 648/B, Ved Transcube Plaza, Main Bus Terminal (GSRTC), Opp: Main Railway Station, K.J. Patel Marg, Vadodara-390005 PAN: AALCS5471P (Respondent) M/s. Sphere Cube Infrastructure Pvt. Ltd., 648/B, Ved Transcube Plaza, Main Bus Terminal (GSRTC), Opp: Main Railway Station, K.J. Patel Marg, Vadodara-390005 PAN: AALCS5471P (Appellant) Vs The ACIT, Central Circle -3, Vadodara (Respondent) IT(SS)A Nos: 73 to 75 & 136/Ahd/2021 & ITA No. 205/Ahd/2021 Assessment Years: 2011-12 to 2014-15 & 2015-16 IT(SS)A Nos: 107, 108/Ahd/2021 & ITA No. 190/Ahd/2021 Assessment Years: 2011-12, 2012-13 & 2015-16 I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 2 The ACIT, Central Circle-3, Vadodara (Appellant) Vs M/s. Sancube Infra Projects Pvt. Ltd., 11/C, Ground Floor, Jaishri Narayan Co-Operative Hsg. Society, Subhanpura, Vadodara-390023 PAN: AANCS7907A (Respondent) Assessee Represented: Shri K.P. Singh & Jigar Adhiyaru, A.R. Revenue Represented: Shri A.P. Singh, CIT-DR Date of hearing : 10-05-2023 Date of pronouncement : 30-06-2023 आदेश/ORDER PER BENCH:- These eleven appeals are filed by the Revenue and Assessee as against the respective Appellate Orders relating to the Assessment Years are as follows: Sphere Cube Infrastructure Pvt. Ltd., Vadodara Asst Years CIT(A) order dated Assessee Appeal Nos. Revenue Appeal Nos. 2011-12 10-03-2021 107/Ahd/2021 73/Ahd/2021 2012-13 10-03-2021 108/Ahd/2021 74/Ahd/2021 2013-14 10-03-2021 - 75/Ahd/2021 2014-15 14-06-2021 - 136/Ahd/2021 2015-16 14-06-2021 190/Ahd/2021 205/Ahd/2021 IT(SS)A Nos: 76, 77/Ahd/2021 & ITA No. 157/Ahd/2021 Assessment Years: 2013-14, 2014-15 & 2015-16 I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 3 Suncube Infra Projects Pvt. Ltd., Ahmedabad Asst Years CIT(A) order dated Revenue Appeal Nos. 2013-14 10-03-2021 157/Ahd/2021 2014-15 10-03-2021 76/Ahd/2021 2015-16 10-03-2021 77/Ahd/2021 2. The two assessees M/s. Sphere Cube Infrastructure Pvt. Ltd., and M/s. Sancube Infra Projects Pvt. Ltd., are part of Sancube Group of Concerns, the issues involved and additions made in both the cases are identical except change in figures. Therefore the above group of appeals are disposed by this common order. 2.1. The two assessees M/s. Sphere Cube Infrastructure Pvt. Ltd. [hereinafter referred as SCIPL] and M/s. Suncube Infra Projects Pvt. Ltd. [SIPPL] are part of Cube Construction Engineering Ltd. M/s. SCIPL was incorporated on 23-11-2007 for the development of Gujarat State Road Transport Corporation (GSRTC) Project and Development of Bus Terminal Facility at Vadodara in the name of Ved Transcube Plaza on a commercial Build, Operate and Transfer [BOT] basis under concession agreement with Government of Gujarat through GSRTC. 2.2. M/s. SIPPL was incorporated on 18-12-2009 for the development of GSRTC Project and Development of Bus Terminal Facility at Ahmedabad in the name of Arved Transcube Plaza on a commercial Build, Operate and Transfer [BOT] basis under concession agreement with Government of Gujarat through GSRTC. 2.3. By. these agreements, the assessee companies had right to I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 4 develop, design, finance, construct and maintain the commercial facility and undertake the marketing, booking and allotment of built up area therein to demand, charge, collect, retain an appropriate the user charge and premia. The assessee companies had leased out/sold/booked few shops to the lessee/purchaser and collected premium/sale value thereon. 3. There was search and survey action conducted on 12-02-2015 in Cube Group concerns including the above two assessees herein. Pursuant to the search, notices u/s. 153A were issued to the assessees and the assesments were completed by making additions mainly on two counts namely (a) on-money received on sale of shops and (b) addition u/s. 68 on account of unsecured loan received from M/s. Blackberry Ventures Pvt. Ltd. . 3.1. During the course of search and seizure action at Baroda in the case of SCIPL, few evidences of collecting on-money were found as follows: (a) Page Nos. 11 to 16 of Annexure-2 and Page Nos. 17 to 20 of Annexure-1 where it was written in table form having column “cash amount already received” and “yet to be received” from various buyers of the shops at Ved Transcube Plaza. (b) Another evidence was in the form of Text message in the Mobile Phone of Smt. Pooja Shah who is the close confident of Shri Sanjay Shah and Smt. Vindiya Shah, Directors of SIPL. In the text message, it was mentioned that for the Shop No. 2/38 out of total consideration of Rs. 15,32,484/- an amount of Rs. 4,50,000/- was received in cash. I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 5 (c) Another evidence was in the form of statement of one of the customer Shri Mohit S. Lala, wherein he admitted that he purchased the shop for Rs. 21 lakhs out of which he paid cash of Rs. 9 lakhs. 3.2. Further the statement of Smt. Pooja Shah and Bindiya Shah were also recorded, wherein they accepted receipt of cash on sale of certain shops, but it was not admitted that cash was received in all the sale of shops. This admission were general in nature, accepting the on-money cash receipt in the cases mentioned 1, 2 & 3 above. However, the AO had presumed that the assessee company was in receipt of on-money from all of its customers. Based on the above evidence, the A.O. has calculated the average rate of on-money received per square feet area by taking the average of total cash component allegedly received as per the afore mentioned evidences from some customer/shop holders of assessee company to the total of built-up area (in sq.ft.) held by the afore mentioned customer. The computation of average rate is tabulated below for ready reference: Sr. No. No. of Shop (I) Built up area (II) On money received in INR (III) On money per sq.ft. in INR Average on-money per sq.ft. in INR (total of III/total of II) 1 177 194 9,00,000 4,639 4,033 2 2/138 145 4,50,000 3,103 3 As per page 11-12 of A2 194 8,00,000 4,123 Total 533 21,50,000 3.3. Thus the A.O. has simply presumed that the assessee company has allegedly received cash from all of its customers and I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 6 accordingly extrapolated the alleged on-money by multiplying the average rate, as derived above, with the total built up area of shops booked during the respective years under consideration by the appellant company and made an addition aggregating to Rs. 13,20,20,255/- in Asst. Years 2011-12 to 2013-14 (6,77,46,334 + 3,41,71,600+ 3,01.02,312) on account of on-money received. 4. In the case of SIPPL at Ahmedabad, during the course of search, no such incriminating materials were found during the course of Search action, however the Assessing Officer [happened to be the same AO of SCIPL] presumed that such on-money was received on sale of all shops by SIPPL at Ahmedabad and accordingly made additions of the on-money for the Assessment Years 2013-14 to 2015-16. 5. The next issue of addition in both the assesses cases are unsecured loan received from a company M/s. Blackberry Ventures Pvt. Ltd. (BVPL) which was floated at Calcutta in the year 2010. BVPL had raised funds of about Rs. 40 crores by issuing shares with premium in the Financial Year 2010-11 to ten different companies. BVPL was acquired by Cubes Group in Financial Year 2013-14, thus Shri Sanjay Shah and Smt. Bindiya Shah Directors of the assessee companies had full control over BVPL. Thereafter BVPL sold whole of its investment of around Rs. 40 crores in the Financial Year 2014-15 & 2015-16. From the sale consideration received from such sales were given as loans to the companies of the Cube Group including the two assesses herein namely SCIPL and SIPPL. During the course of assessment proceedings, in order I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 7 to prove the genuineness of the transaction and creditworthiness of the lender i.e. BVPL, the assessee companies furnished copies of confirmation, Bank statement, ITR and Balance sheet of BVPL. Thus, the assessee companies had duly substantiated the identity of BVPL and its capacity to advance the loans. 5.1. The A.O. rejected the contentions of the assessee companies by stating that, BVPL was floated by an accommodation entry operator of Kolkata namely Mr. Pankaj Agrawal, who has accepted in his statement that BVPL is a Paper company. The A.O. accepted that the source of funds of BVPL is the payments made by various companies against their purchases of investment/shares from BVPL at Rs.21.7 crore in F.Y. 2013-14 and Rs. 18.13 crore in F.Y. 2014-15, however, it was presumed by the AO that all the companies who had purchased the investment of BVPL were paper companies and the amount paid by them was nothing but the unaccounted cash of assessee companies (Cubes group of companies) which was transferred to the account of BVPL and the same was brought back in the books of appellant company in the form of unsecured loans. Thus the A.O. rejected the contention of the assessee companies and made addition on substantive basis in the case of assessee companies. 6. Aggrieved against the assessment orders the assessee companies filed appeals before Commissioner of Income Tax [Appeals], Ahmedabad. The Ld CIT [A] on the first issue namely receipt of on- money partly confirmed the addition and partly deleted the same observing as follows: I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 8 “.... 7.13 For making such a huge addition, the A.O. had relied on the Page 17 to 20 of Annexure A-1 and Page 11to16 of Annexure A-2 of the seized/impounded material. In this regard, it is important to note that, the pages were nothing but mere rough work done by the employees of the company as claimed by the appellant for the reasons stated as under: a. The pages does not contain any date as well as page number. b. It is also not clear from the working who has maintained the same. The working on the pages impounded is ambiguous and not clear. c. The pages are not authenticated by any responsible person. d. Pages reflect mere proportion of the cash or cheque receipts, but no dates of receipts are mentioned. e. Also, the total of the cash component reflected in pages found is far less than the disclosure made by the appellant company. 7.14 In view of the above, as per the appellant it can be interpreted that the accuracy of the documents found itself is unconvinced and the information contained in it is not reliable. They are nothing more than dumb documents and therefore, same cannot be taken as a base for making the presumption that the appellant company had received cash component from all the shop holder. 7.15 With regard to the statement of Shri Moin S Lala regarding the payment of cash of Rs. 9,00,000/- out of the total payment made by him of Rs.21,00,000/- and SMS found from mobile of Smt. Pooja Shah which depicts that the appellant company had received cash Rs.4,50,000/- from Harshadbhai Bhatt for shop no. 2/38, it has been submitted that the amount received from both the parties were for the extra work done for them. As mentioned in earlier para, the amount received from them was also part of the disclosure of Rs.3,50,00,000/. Thus, the same cannot be taken as a base for making a presumption that the appellant company is receipt of on-money from all of its customers. 7.16 However, on the basis of the seized papers as referred by the AO in the assessment order i.e. page No.11 to 16 of Annexure A/2 and page No. 17 to 20 of Annexure A/1, the details of the sales of each of the units has been called for from the appellant. ................ I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 9 With regard to the on-money receipt of Rs.2,23,29,500/- as per the evidences found/seized during the course of search as tabulated in the preceding paras of this order and also the discussions made in the subsequent paras of this order is also required to be taxed. However, on the basis of the seized pages it is not ascertained when such on-money receipts have been received by the appellant. Since the appellant has already made the admission of the on-money receipt of Rs.2,50,00,000/- in A.Y.2015-16 therefore, the on- money receipts as per seized records is fully covered by the admission so made. Thus the addition made to the extent of Rs.2,50,00,000/- in respect of on-money receipt is found correct and justified and hence the same is confirmed in A.Y.2015-16. 7.19 It has also been submitted that no incriminating documents were found during the search proceedings in the case of appellant company which substantiate the fact that appellant company had received cash from all customers in all the assessment years. Therefore, the mere presumption that the appellant company had received cash component from all the customers/shop holders is completely groundless. Also, there is no concrete reason with the A.O. to doubt that the appellant company is in receipt of cash component more than the amount of disclosure made. 7.20 Moreover, Vide Para 6.5, the A.O. strongly contended that while recording the statement, Smt. Bindiya Shah, director of the company, in her reply to question 7 and 8 had confirmed that the appellant company is in receipt of 'on-money' from its customers. However, it is pertinent to note that she had confirmed that cash received from some of its customers and that to on their instances. 7.21 It was also stated by the A.O. that, Smt. Pooja Shah was the main person looking into the bookings and sale process of various shops at Ved Transcube Plaza, Vadodara and Arved Transcube Plaza, Ahmedabad and Ms. Pooja Shah has also confirmed regarding the receipt of cash component. However, the appellant objected to the same stating that she has never stated in her statement that the appellant company is in receipt of cash from its all customers. 7.22 There is no tangible and clinching evidence brought on record by the A.O. to prove that the appellant company had received cash 'on-money' from all its customers on the booking/sale of flats in the year under consideration. The above facts amply clear that additions have been made I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 10 in the case of appellant, merely based on assumptions except to the evidences found and seized and also the admission of on-money receipt which are not legitimate in the eyes of laws. 7.23 In support of the contention, reliance has been placed upon some of the judicial pronouncements, delivered by various courts of law, as below: 7.27 The appellant has submitted the working of shop wise details mentioning that out of the total 424 units, 277 units i.c. 65% of the units were held by Cube Group of companies and in such situation the on- money payment is not expected. But the AO presumed that 'on money' has also been received on such bookings made. Such presumptions are not correct and justifiable. Once cannot presume that 'on-money' is received from the related party of the appellant company also. The presumption made by AO is baseless and therefore addition of on-money on such shops needs to be deleted. Therefore, the possibility of charging the on-money by the appellant company from the group persons and concerns is highly improbable. More so when there are no evidences found during the course of search in respect of such on-money on the sales of shops to the group persons and concerns. Thus, the AO's extrapolation of on-money receipts on the shops sold other than the shops found noted in the seized paper does not carry any legal support and hence not approved. 7.28 Without prejudice to the above, the appellant has also submitted that the company CCEL was awarded a contract for development of Bus terminal at Vadodara under Public Private Partnership by Gujarat State Road Transport Corporation (GSRTC) on Built, Operate and Transfer (BOT) basis. As per the terms of Concession Agreement, the company CCEL, has subsequently incorporated the appellant company, a Special Purpose Vehicle for carrying out the said project. 7.29 Furthermore, as per the Concession Contract the appellant company is required to develop, design, finance, construct, Operate and maintain the Bus Terminal Facility (BTF) project facilities, passenger facilities and amenities including parking lots, common area and other structural works. The BTF is to be operated and maintained for the concession period of 31.5 years and thereafter handed over to GSRTC. The project also involves the right to develop, design, finance, construct and maintain the Commercial Facility (CF) along with the bus terminus building. The built up I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 11 area in the CF can be allotted to third party, however the third party/applicant/allottee/user have to enter into lease agreement with GSRTC (the "Lessor"). As per the Concession terms the appellant company would act as a confirming party and would have the right to collect one time Premium for the built up area in the CF from the applicant/ allottees/ lessees at market driven rates. 7.31 Here, the A.O. has presumed that appellant company have received on- money from all of its customers/ shop holder and accordingly, the AO had determined an average rate of 'on- money' and had applied the same to the total bookings done by the appellant company in the respective years under consideration. The A.O. while doing so had totally ignored the facts that certain bookings were done by the related party of the appellant company. In result, the addition of on-money receipts in respect of the appellant for different years is confirmed as under: S No. A.Y. Amount (Rs.) 1. A.Y. 2011-12 20,00,000/- 2. A.Y. 2012-13 80,00,000/- 3. A.Y. 2015-16 2,50,00,000/- 3,50,00,000/- Further the relief is granted for the balance addition. In view of the above, the ground of appeal is partly allowed." 7.32 In view of the above decision taken on the issue under consideration while deciding the appeal of the appellant of the earlier years the on money receipt of Rs.2,50,00,000/- is directed to be brought to tax in the year under consideration. Therefore, the addition of the on money receipt of Rs.2,50,00,000/- is confirmed. Relief is granted for the balance addition. The ground of appeal is partly allowed. ” 6.1. On the second issue namely addition u/s. 68 on account of unsecured loans received from M/s. Blackberry Ventures Pvt. Ltd. the Ld CIT [A] deleted the same observing as follows: I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 12 “.... 7.13 The appellant has also submitted that on the basis of statement of Mr. Pankaj Agarwal, the A.O. had made an addition of Rs 40,16,29,000/- in the case of BVPL in A.Y.2011-12, the year in which BVPL has raised fund in form of share capital. The fund so raised was invested by BVPL in the share of different companies. In A.Y. 2014-15 and A.Y. 2015-16, such investments were sold and out of the sale proceeds BVPL has advanced unsecured-loan to appellant company. 7.14 Here, once the addition is made in the case of BVPL by A.O. treating the share application as unexplained cash credit u/s.68 of the Act, in AY. 2011-12. Thereafter once again it has made the addition in the case of BVPL in A.Y.2014-15 & 2015-16 of the sale proceeds of the shares which were purchased out of the funds received by raising the share application/capital. The AO not only made the double addition of the same amount in the case of BVPL as mentioned above but further went on to make the addition of the similar amount third time the same amount in the cases of borrowers i.e. group companies who have taken the loans from BVPL who granted such loans from its sale proceeds received from sale of shares. The A.O. had made addition twice, once at the time of raising the funds i.e. in A.Y. 2011-12 and secondly on the application of fund i.e. in A.Y. 2014-15 & A.Y. 2015-16 in the case of BVPL and thirdly in the cases of group companies for the loans taken by them from BVPL who granted the loans to group companies including the appellant company in A.Y. 2014-15 & 2015-16. 7.15 The addition has already been made by the A.O. in A.Y. 2011-12 in case of BVPL and therefore, the addition should not have been made again at the time of sale of investment by BVPL or on lending money in the form of unsecured loan to the appellant from such sales proceeds. Addition cannot be made on both way i.e. sources and its application. 7.16 It is worth here to mention that in the case of BVPL for A.Y.2011-12 the appeal has been decided by this office and the addition made on account of share capital/premium was found legally not tenable and hence the same was deleted. Similarly in the case of BVPL for A.Y.2014-15 & I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 13 2015-16 the addition made by the AO on account of unexplained sale proceeds of the shares which were originally purchased. from the funds raised by way of share capital/premium was also deleted on merits with the detailed discussion made in the appellate order passed in the case of BVPL. Since the sale proceeds of the shares sold by BVPL remains undoubted, the utilization/application of such sale proceeds by BVPL for granting the loan to the group companies is fully explained as also the source of such loans (sale proceeds of shares) are duly recorded in the books of accounts of BVPL, Thus the identity, genuineness and creditworthiness of BVPL is not in doubt. Therefore, there is no case of addition in the hands of appellant and other group companies who have taken the loans from BVPL. The second presumption made by the A.O. was that, the money transferred in the account of BVPL is unaccounted income of appellant company (cube group of companies) which has been brought back in the form of unsecured loans in the books of accounts. 7.17 It seems that the A.O. has tried to establish the nexus of the appellant company with the creditors of creditor of BVPL and presumed that cash is deposited by the appellant company in the bank accounts of such creditors. However, the AO failed to produce any corroborative evidence which can lead to the conclusion that the cash deposited in the bank accounts of such creditors is belonging to the appellant company. 7.18 The assumptions of the A.O. are without any substance, as the appellant company had proved the genuineness of the transactions and creditworthiness of lender company i.e. BVPL. All the relevant documents such as ITRS, Bank statement and Confirmation of BVPL were furnished during the course of assessment proceeding. The appellant company had also confirmed that BVPL had arranged the funds by selling its investment. Therefore, the appellant had not only furnished the source of credit entries but also explained the source of source. Therefore, the onus of prove is duly discharged by the appellant company. I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 14 7.19 It is also submitted that the appellant company would not have to keep specific knowledge about sources of the funds in the hands of the creditors of the creditors. There were around 31 companies in F.Y. 2013- 14 and 17 companies in FY.2014-15 who had purchased the investment of BVPL and there would be many business transactions undertaken by the purchasers of investment of BVPL with their creditors for arranging such funds, how can the appellant would have specific knowledge of such creditors? Further, the AO could not have established any nexus between the appellant company and the different creditors of purchaser of investment of BVPL by producing any convincing evidences. The A.O. had stated that the cash is deposited in the bank account of such creditors of purchaser of Investment of BVPL. If the A.O. had found such transactions as doubtful then the addition should have been made in the hands of the creditors and not in the case of the appellant. The appellant company cannot be made liable to explain the source of such credits entries. 7.20 Additionally, it is also to be noted that the AO could not produce any cogent evidence in support of his contentions that the purchaser entities of the investments of BVPL were also paper companies. This shows that the AO has acted upon the assumptions which was not correct in the eyes of law. ..... 7.27 During the course of search and seizure action the search party could not find any incriminating evidence, document or piece of paper which can establish nexus of the alleged loans granted by BVPL to appellant company and other concerns vis-à-vis the undisclosed income derived, if any by BVPL. 7.28 It is stated that if the AO would have found any incriminating to paper or document, he would have incorporated the same in the show cause notice or assessment order, however, the AO has not indicated any incriminating document or paper assessment order which itself shows that AO did not have any adverse evidences for the purpose of making the addition. I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 15 7.29 For the purpose of making addition, the AO merely relied upon the statement of the party, ie. Mr. Pankaj Agrawal. On 11.06.2014, statement under section 131 of the Act was recorded of Mr. Pankaj Agrawal, allegedly an accommodation entry ..operator, who has stated that he was involved in providing accommodation entries to the beneficiaries through share capital and unsecured loans from fictitious paper companies floated by him and the appellant company is one of them. 7.30 It was further stated that neither the Cube group of companies nor its directors or any related to them is directly or indirectly know Mr. Pankaj Agrawal. There is no nexus of the appellant with Mr. Pankaj Agrawal, however, merely in order to make the addition, the AO has relied upon the third-party statement, which is not legitimate in the eyes of law. 7.31 It is also worth to mention that before making addition, the AO should cross examined the authenticity of the statement recorded of Mr. Pankaj Agrawal. Here, it is crystal clear that the AO has just relied upon the report of investigation department, Kolkatta, which was never confronted to the appellant which also shows violation of interest of natural justice. 7.32 There was nothing on record to show the basis on which the AO has contended that the BVPL was a paper company. The AO should have independently conducted an enquiry but he failed to do so, therefore, the AO has no right to make the addition merely relying on the third party’s statement and without making any independent enquiry. In view of the above discussion, the addition made in the case of appellant company is not justified and hence the same is deleted. “ 6.2. To put in a nut shell the deletion made by the Ld CIT[A] and the addition confirmed by the Ld CIT[A] in the case of SCIPL is summarized in a tabulator format as below: I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 16 Sphere Cube Infrastructure Pvt. Ltd., Vadodara Assessment Years On-Money Deleted On-Money Confirmed 68 addition 2011-12 6,77,46,334/- 20,00,000/- - 2012-13 4,02,56,652/- 80,00,000/- - 2013-14 3,01,02,312/- - - 2014-15 14,40,78,925/- - 2,32,50,000/- 2015-16 21,73,70,634/- 2,50,00,000/- 14,29,94,402/- TOTAL 49,95,54,857/- 3,50,00,000/- 16,62,44,402/- 7. In the case of SIPPL, Ahmedabad there is no seized material having receipt of any On-money by the assessee. However the Ld AO adopted the same ratio in this case also and made addition of Rs.24,84,56,998/=. The Ld CIT [A] deleted the entire addition on account of on-money as there were seized materials by the Revenue. The Ld CIT[A] also deleted the addition made u/s.68 on account of unsecured loans. To put in a nut shell the deletions made by the Ld CIT[A] in the case of SIPPL is summarized in a tabulator format as below: Suncube Infra Projects Pvt. Ltd., Ahmedabad Asst. Years On-Money Deleted 68 addition Deleted 2013-14 6,45,44,132/- - 2014-15 17,49,95,903/- 2,37,50,000/- 2015-16 89,16,963/- 6,76,00,000/- TOTAL 24,84,56,998/- 9,13,50,000/- I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 17 8. Aggrieved against the appellate order the Revenue is in appeal before us raising the Grounds of Appeal in the case of M/s. Sphere Cube Infrastructure Pvt. Ltd., [In ITA No.205/AHD/2021 relating to the A.Y.2015-16] which reads as under: “[1] On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition of Rs.21,73,70634/- to Rs.2,50,00,000 from on account of on-money receipt from the project Ved Trans Cube Plaza at Vadodara. [2]. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the incriminating documents found and seized during the course of search proceedings and treating the same as dumb documents which established receipt of one money and also erred in ignoring the fact that some of the persons who have given the 'on money' have also been categorically admitted the same. [3] On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the Director of the company has admitted the factum of receipt of on money and admitted the unaccounted income earned during the relevant years which was sufficient to establish the nexus of seized document with the unaccounted income of the assessee and enough trigger for the application of extrapolation. [4] On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.14,29,94,402/- on account of unsecured loan received from Blackberry Ventures Pvt. Ltd. [5] On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 14,29,94,402/- on account of unsecured loan without appreciating the fact that such accommodation entry in form of unsecured loan was arranged by the assessee from the Kolkata based entry providing companies, which was accepted by the directors of the entry providing companies before the Investigation Wing. [6] On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 14,29,94,402/- made on account of unsecured loan without appreciating the fact that the assessee had failed to prove the Identity, creditworthiness& genuineness of the Kolkata based investor companies from whom unsecured loan was received. [7] It is therefore, prayed that the order of Ld.CIT(A)-12, Ahmedabad may be set aside and that of the AO may be restored to the above extent. I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 18 [8] The appellant craves leave to add, alter, amend and or withdraw any ground (s) of appeal either before or during the course of hearing of the appeal.” 9. The Grounds of Appeal raised by the Revenue in the case of M/s. Sun Cube Infra Projects Pvt. Ltd. [In ITA No.76/AHD/2021 relating to the A.Y.2014-15] reads as under: “[1] On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 17,49,95,903/- on account of on- money receipt from the project Arved Tran Scube Plaza at Vadodara. (2) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the admissions made by Smt. Bindya Shah, the common Director of the concerns of the group (including the assessee company) and Smt. Pooja Shah, the person who was in-charge of sales of units in the projects, in their sworn in statement that the group companies were involved in the practice of collecting on money on sale of Units in the projects undertaken by them. [3] On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition, ignoring the fact that the extrapolation of unaccounted on money was made by the Assessing Officer on the basis of admissions made by the Director and the person in-charge of sales as also the admission of on money payment made by the customer of the associated concerns [4] On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred deleting the addition of Rs.2,37,50,000/- made on account of unexplained cash credit ignoring the fact that the assessee has failed to explain the sum so credited, to the satisfaction of the Assessing Officer, in terms of Section 68 of the I.T. Act read with first proviso. [5] On the facts and in the circumstances of the case and law, the Ld. CIT(A) has erred in holding that the assessee has not only furnished the source of credit entries but also explained the source of source. [6] On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred deleting the addition, ignoring the complete facts brought out by the Assessing Officer to establish that the transactions were not genuine and funds were brought in by layering of transactions by depositing cash in bank accounts of different parties and transferring the funds to the bank accounts of the persons who have purchased the share from Blackberry Ventures Pvt. Ltd.(BVPL) and subsequent transfer to the assessee under the guise of unsecured loans. I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 19 [7] On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the Assessing Officer has merely relied upon the statement of Shri Pankaj Agarwal without considering the details and facts brought out independently by the Assessing Officer in the assessment order. [8] On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting both the substantive addition made in the case of the assessee as well as the protective addition made in the case of BVPL. [9] It is, therefore, prayed that the order the Ld. CIT(A)-12, Ahmedabad may be set aside and that of the AO may be restored to the above extent. [10] The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 10. Ld. Counsel Mr. K.P. Singh appearing for the assessee reiterated the submission made before Ld. CIT(A) that there was no element of on-money received by the assessee on sale of units/shops by the assessee. Since 65% of the shops/units were booked by the group companies, thus there is no possibility of receipt of on money on the entire sale transaction made by the assessee. That apart the assessee itself has declared undisclosed income of the assessee of Rs.20,00,000/-, Rs.80,00,000/- and Rs.2,50,00,000/- relating to the Assessment Years 2011-12, 2012- 13 and 2015-16 relating to the discrepancies found during the course of search. The Assessing Officer based on mere surmises and assumptions and without any material on record held that on money was received by the assessee for the entire project and made addition which is not sustainable in law. 11. Per contra, the Ld. CIT-DR Shri A.P. Singh appearing for the Revenue supported the order passed by the Assessing Officer and Ld. CIT(A) is not correct in deleting the additions made on account I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 20 of on-money received by the assessee based on the statements recorded from the key person who is looking after the sales and marketing of the above shops/units. Thus the Ld. D.R. pleaded to restore the order passed by the Assessing Officer. 12. We have given our thoughtful consideration and perused the materials available on record including the synopsis and case laws filed by the assessee. The Grounds of Appeals raised by the Revenue in both the assessee’s cases namely SCIPL and SIPPL are identical except change in figures of disallowance made by the AO, so the issues namely “addition on account of ON-money” and “addition on account of Unsecured Loan from BVPL” are dealt here as follows. 12.1. It is an admitted fact that 424 units/shops were built by the assessee in the name of Ved Transcube Plaza on a commercial BOT basis under agreement with GSRTC. The ground floor of the portion of the complex has 104 shops and hotel premises. 1 st Floor has 105 shops. 1 st Floor MM and 2 nd Floor with 83 shops each + Gujarati Thali and a Commercial place. 3 rd to 5 th Floor wherein place for Hotel, Entertainment, Offices, Banquet Hall, Food Court and Games Zone. Thus there is 424 units were constructed by the assessee out of which 277 units were booked/sold before the date of search namely 12.02.2015. The Ld. CIT(A) has considered the above details namely name of the purchasers, unit no., built up area, date of purchase, registration, consideration amount, bank and cheque details etc., by way of tabulator format at Page Nos. 45 to 62 of the Appellate order. The tabulator column also depicts the I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 21 cancellation of the units and re-allotment to other parties refund paid to the parties in the above table. 12.3. It is seen from the statement recorded of Smt. Vindiya Shah on 05-05-2015 that cash was received from some of the customers at their instances. She could not able to provide exact quantum of cash received from the customers and she agreed to submit the complete details within a short period of time. Thereafter on 25.05.2015, the assessee SCIPL suo moto made a disclosure of Rs. 3.5 crores. The assessee claimed the above undisclosed income is relating to the statement of Mohit S. Lala regarding the payment of cash of Rs. 9,00,000/- out of the total payment of Rs. 21,00,000/- and similarly text message received in the mobile phone of Smt. Puja Shah that Rs.4.5 lakhs of cash received against total consideration of Rs.15,32,484/- for purchase of Shop No. 2/38. That Apart, the seized material does not contain any date as well as the chronological page number or any signature. It is also not clear from the working who has maintained the sale and the details are ambiguous and not clear. Further the cash components reflecting in the pages found far less than the disclosure of Rs. 3.5 crores declared by the assessee. Thus the seized documents are nothing more than the dumb documents and therefore same cannot be taken as base for making presumption and assumption that the assessee company had received on-money component for sale of every shops sold. 12.3. It is further seen from the Ld. CIT(A) from Page Nos. 22 to 26 based on A-1 & A-2 at Page Nos. 11 to 20 that no date of receipt of I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 22 on-money is recorded on such seized materials. As per the above seized materials, the total on-money received works out to Rs. 2,23,29,500/- whereas the assessee has declared unaccounted income of Rs. 3.5 crores for three assessment years. Though the assessee claimed the on-money received buy it is shown as current liability on the liability side of the balance sheet and simultaneously the amount was shown as withdrawal by the Director Smt. Vindiya Shah on purchase of land by the assessee in the balance sheet. This claim of the assessee was rejected by the Ld. CIT(A) on the ground that the assessee has not offered the on- money received as income both in the Profit and Loss account and computation of income, but the receipt is routed and shown in the balance sheet as the loans and advances to the Director. Thus the assessee failed to offer income on the on-money. Therefore the Ld. CIT(A) confirmed the receipt of on-money of Rs. 20,00,000/-, 80,00,000/- & 2,50,00,000/- relating to the Assessment Years 2011-12, 2012-13 & 2015-16 respectively. 12.4. It is further seen from the statement recorded of Smt. Vindiya Shah, Director of the assessee company in reply to Question No.7 & 8 had confirmed that the assessee company is in receipt of on- money from its customers on their instructions and NOT from all the customers. Smt.Vindiya shah has never stated in her statement that the assessee company received cash from all its customers. It is well settled principle of law that no addition could be made merely by relying on the statement recorded u/s. 132(4) of the Act when there was no material evidence available during the course of search. Such an addition is unjustifiable in the eye of law. I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 23 12.5. The whole purpose of conduct of search/survey is to collect evidences to determine the undisclosed income of the assessee. CBDT, itself has issued an Instruction No.286/2003 dated 10-3- 2003 to the effect that the confession made through a statement in the course of Search/Survey cannot be the basis for any addition in absence of supporting or corroborative material. The contents of the instruction is reproduced for ready reference: "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are altered retracted by the concerned assessee while filing returns of income. In these circumstances, confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is therefore advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the IT Department. Similarly, while recording statement during the course of search and seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action contrary shall be viewed adversely." 12.6. The above CBDT instruction has been considered by the Hon'ble Jurisdictional High Court in the following cases: Chetnaben J. Shah 79 taxmann.com 328 (Guj.) Where there was no material to show that assessee was carrying on speculation business in shares, addition on account of unexplained income from speculation business only on basis of assessee's disclosure under section 132(4) could not be sustained. M. P. Scrap Traders 60 taxmann.com 205 (Guj.) Unexplained investments (Retraction of statements) Assessment year 2007- 08 - Assessing Officer made addition I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 24 in hands of assessee-firm as well as its partner, as unexplained investments solely relying upon statement of partner recorded at time of survey which was subsequently retracted - Except said statement, there was no other material or corroborative material with Assessing Officer to justify said addition Whether additions made by Assessing Officer were to be deleted - Held, yes Chandrakumar Jethmal Kochar 55 taxmann.com (Gujarat) During search conducted at assessee's business premises, his statement was recorded under section 132(4) wherein he admitted that few benami concerns were being run by assessee in name of his employees. Thereafter, during assessment proceeding, he retracted from said admission contending that it was made at mid night under pressure and coercion Assessing Officer, however, made addition on basis of disclosure made by assessee in statement recorded under section 132(4)- Whether merely on basis of admission that few benami concerns were being run by assessee, assessee could not be subjected to such addition when despite retraction revenue could not furnish any corroborative evidence in support of such admission - Held, yes. 12.7. It is further seen from A-1 & A-2, there were no dates mentioned in the seized documents. Thus in the absence of dates in the seized material, it is not possible for the Assessing Officer to determine the income relating to which assessment year. Further there is no tangible and clinching evidence brought on record by the A.O. to prove that the assessee company had received cash 'on- money' from all its customers on the booking/sale of flats in the years under consideration. The above facts amply clear that additions have been made in the case of assessee, merely based on assumptions except to the evidences found and seized and also the admission of on-money receipt which are not legitimate in the eyes of laws. Therefore the addition made by the Assessing Officer is I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 25 merely based on surmises and conjectures. By merely relying upon statement recorded during the course of search without any material evidences, and consequential additions made by the A.O. is unjustifiable and unsustainable in law. 12.8. In this regard, the Jurisdictional High Court in the case of CIT Vs. Amar Corporation in Tax Appeal No. 26 of 2012 dated 18- 07-2012 held as follows: “....A search was carried out under section 132 of the Act on 18.06.2003 in which certain loose papers and documents were found and were seized. The statement of Vimal Chimanbhai Shah, partner of the assessee firm, and that of one Chimanbhai Shah, whose proprietary concern had carried out the construction work, came to be recorded. In the initial statement, undisclosed income was admitted, but that was retracted in statement under section 132(4) of the Act by way of affidavit. 3.1 From the loose papers being page No.19, page No.80 and page No.65 found during the search, the Assessing Officer came to a conclusion that the assessee had received On-money at the rate of Rs.180/- per sq. ft. On that basis, he worked out the `On-money' additions for all the Assessment Years 1988- 99 to 2004-05, the amounts of Rs.96,50,613/-, Rs.10,54,695/-, Rs.11,95,195/-, Rs.1,58,17,291/-, Rs.41,23,447/- and Rs.1,03,18,945/- respectively. In respect of the year under consideration i.e. 2005-06, in course of assessment proceedings under section 143(3), the Assessing Officer made addition of Rs.1,52,53,128/-. ............................. 5. It could be seen from the facts that the housing projects were developed during the years prior to Assessment Year 2004-05. The search was conducted on 18.06.2003 wherein the loose papers or the documents were seized. The material seized in form of loose paper was qua one flat No. A/204 only in respect of which taking of `on-money' could be alleged. It was on the basis of such loose papers, the addition on On-money account was sought to be made. That material could not have been used for the subsequent years for making addition on the same count. The addition in the Assessment Year 2004-05 was not sustained by the I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 26 Tribunal in the appeal before it on the ground that the Assessing Officer ought to have confined himself in respect of sale transaction of one particular flat and he could not have on that basis calculated the addition for all flats. Accordingly, in respect of previous Assessment Year 2004-05, it was held by the Tribunal that the addition for On-money, made in the said year was not proper inasmuch as such addition could have been made only in respect of the flat in respect of which the evidence of On-money was found at the time of search. The said decision dated 31.03.2011 of ITAT, Ahmedabad was relied on, on behalf of the assessee. 5.1 Even as for the year 2004-05 also, the addition on account of On money was held to be on the basis of guess work and extrapolation, again in the next year 2005-06 being year under consideration the addition of Rs.1,52,53,128/- was made repeating the same story. When in respect of previous Assessment Year 2004-05 also the Tribunal had dismissed the Department’s appeal on the ground that the addition in that year also was based on extrapolation, it emerged beyond pale of doubt that for the addition made for the year 2005-06 there was no evidence whatsoever and the same was presumptive in nature. 6. In above view, the findings recorded by the Tribunal were proper and legal flowing logically from the facts on record. The Tribunal has not committed any error in passing the impugned order. The appeal is devoid of merit, and raises no substantial question of law required to be considered.” 12.9. The Jurisdictional High Court in the case of CIT Vs. Maulikkumar K. Shah reported in 307 ITR 137 held as follows: “The assessee has booked 35 shops as on the date of search, on which the Department has charged "on-money" in the asst. yr. 1995-96. In his statement recorded under s. 132(4), S denied to have charged any "on- money". The notings on the seized diary found from the premises of S is the only material on the basis of which the AO has made the impugned additions. The AO has not brought any corroborative material on record to prove that such sales were made and "on-money" was received by the assessee outside the books of account. The AO has not examined any purchaser to whom the sales of shops were effected. Onus heavily lay on I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 27 the Revenue to prove with corroborative evidence that the entries in the seized diary actually represent the sales made by the assessee. Such onus has not been discharged by the Revenue. Mere entries in the seized material are not sufficient to prove that the assessee has indulged in such a transaction. It is well-settled that if certain documents were found from the possession of the assessee during the course of search operation, burden lies on the assessee to explain the nature of transactions recorded in the said seized material. The assessee is duty-bound to explain discrepancy, if found, on the basis of seized materials vis-a-vis books of account. But when the assessee furnishes explanation which sought to be supported by evidence, the burden is shifted to the Revenue to establish that the explanation of the assessee is false. Right from the beginning the assessee is stating that the notings appearing in the diary are rough estimates and estimation was made for submission to the bank for obtaining the loan from bank. The inference of the AO that the assessee has received "on-money", i.e., the differential amount as shown in the seized diary and books of account, is merely based on suspicion and surmises and there is no material whatsoever to support the conclusion of the AO that the assessee has in fact received any "on-money". The AO has no evidence with him to support his conclusion. The Court also take juridical note of the fact that the assessee has worked out floor-wise rate of the shop on the seized paper but it is not possible that every shop can be sold at that price and while selling the shops many purchasers may pay advance money. Therefore, rates of all the shops at the time of actual sales cannot be the same as estimated in the seized paper. The additions as made by the AO being based on mere presumptions and assumptions and without any corroborative evidence, cannot be sustained and the said additions have rightly been deleted by the CIT(A) in all the years under consideration. The amount mentioned along with rates per square feet of different floors on the loose papers is in respect of an estimate asking for the loan from the bank. No other evidence has been shown to justify that these amounts were received from purchasers. The CIT(A) and the Tribunal both found that on the basis of these loose papers, no addition is justified. No interference is, therefore, called for in the order of the Tribunal.” I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 28 12.10. It is appropriate to place on record the Hon'ble Supreme Court decisions in the case of Omar Salav Mohamed Sait reported in (1989) [37 ITR 151] (SC) where it is held that no addition can be made on the basis of surmises, suspicion and conjectures. In the case of CIT(Central), Kolkata vs. Daulat Ram Rawatmull reported in [87 ITR 349], the Hon'ble Apex Court held that, the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences, which would directly prove the fact of bogusness or establish circumstance unerringly and reasonably raising an interference to that effect. The Hon'ble Supreme Court in the case of Umacharan Shah & Bros. Vs. CIT [37 ITR 271] held that suspicion however strong, cannot take the place of evidence. 13. Respectfully following the above judgments, we have no hesitation in deleting the additions made by the Assessing Officer on account of on-money received by the assessee on the entire project in the case of SIPPL but restricting to the extent undisclosed income of Rs.3.5 crores declared by the assessee in the case of SCIPL. Thus the Grounds raised by the Revenue are devoid of merits and the same is liable to be dismissed. 14. The next issue namely addition made u/s. 68 on account of unsecured loan received from M/s. Blackberry Ventures Pvt. Ltd. Ld. Counsel Mr. K.P. Singh appearing for the assessee reiterated the submission made before Ld. CIT(A). The Ld A.O. on the wrong presumption and based on the Report of the Investigation Team I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 29 held that BVPL was floated by an accommodation entry operator of Kolkata namely Mr. Pankaj Agrawal, who has accepted in his statement that BVPL is a Paper company. The A.O. further presumed that all the companies who had purchased the investment of BVPL were paper companies and the amount paid by them were nothing but the unaccounted cash of the assessee companies (Cubes group of companies) which was transferred to the account of BVPL and the same was brought back in the books of assessee companies in the form of unsecured loans. 14.1. In order to prove the genuineness of the transaction and credit worthiness of the lender i.e. BVPL, the assessee companies furnished copies of confirmation, Bank statement, ITR and Balance sheet of BVPL. Thus, the assessee companies had duly substantiated the identity of BVPL and its capacity to advance the loans. The Ld CIT[A] deleted the additions based on his decision in the case of BVPL for the Asst. Year 2011-12 wherein the addition made on account of share capital/premium was found legally not tenable and hence the deleted the same. Since the sale proceeds of the shares sold by BVPL remains undoubted, the utilization/ application of such sale proceeds by BVPL for granting the loan to the group companies is fully explained as also the source of such loans [sale proceeds of shares] are duly recorded in the books of accounts of BVPL. Thus the identity, genuineness and credit worthiness of BVPL is not in doubt. 14.2. The co-ordinate Bench of this Tribunal in the case of ACIT - Vs- BVPL in IT[SS]A Nos.84/Ahd/2021 & others dated 26-04-2023 I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 30 deleted the additions made by the AO and held that the assessee company was having fund in the form of share capital and premium which was invested in the shares of different companies and finally when the investment was sold and the amount was lent to the Cube group as loans and thus dismissed the Revenue appeals. 15. Per contra, the Ld. CIT-DR Shri A.P. Singh appearing for the Revenue supported the order passed by the Assessing Officer and pleaded that Ld. CIT(A) is not correct in deleting the additions made on account of unsecured loans. Further vide his letter dated 02-02- 23 filed the copy of the assessment order in the case of BVPL relating to the Asst. Year 11-12 and uphold the addition. 16. We have given our thoughtful consideration and perused the materials available on record. The addition made by the Assessing Officer invoking Section 68 does not hold it good, since the assessee has filed the confirmation letter from the lenders, Bank statements, Income Tax Return of BVPL. Thus the assessee has discharged its initial onus namely identity of the creditors, genuineness of the transactions and creditworthiness of the creditors. Further the Assessing Officer has disbelieved the same, but has no occasion about the repayment of loans by the assessee in subsequent assessment years. Thus the creditworthiness of the lender is proved. Therefore the addition made by the Assessing Officer u/s. 68 of the Act is not sustainable in law. I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 31 16.1. Further the Hon’ble Jurisdictional High Court in the case of Ayachi Chandrashekhar Narsangji (cited supra) it was held as follows: Section 68, read with section 143, of the Income-tax Act, 1961 - Cash credit [Loans] -Assessment year 2006-07 - Assessing Officer framed ,assessment under section 143(3) wherein he made addition of Rs. 1.45 crore under section 68 on ground that loan taken from one ‘IA’ was not explained satisfactorily - On appeal, Commissioner (Appeals) was satisfied with respect to genuineness of transaction and creditworthiness of MA' and, therefore, deleted addition - It was found that total loan of Rs. 1.60 crore was advanced to assessee, out of which Rs.15 lakh was repaid - Therefore, an amount of Rs.1.45 crore remained outstanding to be paid to ‘IA’ - Balance loan amount was repaid by assessee in immediately next financial year - Whether when Department had accepted same, addition made by Assessing Officer was to be deleted - Held, yes [Para 6] [In favour of assessee] 16.2. In the case of CIT Vs. Shri Mahavir Crimpers, [2018] 95 taxmann.com 323 (Guj.) wherein it has been held as follows: "5. We have heard both the parties. There is no dispute so far as identity of the creditor party M/s. Raj Capital & Finance Pvt. Ltd. is concerned. There is further no quarrel that the Assessing Officer does not dispute the fact that the assessee has not availed any cash loan from the said entity. His only case is that the assessee has not been able to prove source along with genuineness and creditworthiness of the above stated entity. It emanates from above extracted portion that the assessee has filed all relevant details along with assessment records of the said entity explaining source of the loans to the above entity's balance sheet indicating sufficient reserves, surplus and share premium as followed by repayment in succeeding assessment year. Learned Departmental Representative fails to rebut CIT (A)'s conclusion that the assessee has been having regular loan transactions with the said entity. We notice in this backdrop that Hon'ble Jurisdictional high court's decision in DCIT v. Rohini Builders, (2002) 256 ITR 360 (Guj) upholding tribunal's conclusion deleting Section 68 addition in view of identical details; squarely applies here. So in their lordships' latter decision in CIT v. Ayachi Chandrashekhar Narsangji (2014) 42 I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 32 taxmann.com 251 (Guj) confirming this tribunal's another decision reversing Section 68 addition wherein the department head accepted repayment of loan in subsequent year to be correct. We take into account all these facts and judicial precedents to affirm CIT(A)'s findings under challenge deleting the impugned addition. This first substantive ground is accordingly declined." 16.3. In the case of ITO Vs. Shanti Enterprise, [2016] 71 taxmann.com 275 wherein it has been held as follows: ".....amounts were received by the assessee by account payee cheques and initial burden of proving the credits was discharged. It is held that the assessee need not prove the source of the credits and the fact that the explanation was not satisfactory would not automatically result in deeming amounts as income of the assessee...." 17. Further very recently co-ordinate Bench of this Tribunal in the case of ACIT -Vs- BVPL in IT[SS]A Nos.84/Ahd/2021 & others dated 26-04-2023 deleted the additions made by the AO observing as follows: “...20.3 Coming to the facts of the case to hand, the AO based on the statement one Shri Pankaj Aggarwal held that the assessee company is a paper company. There was no nexus whatsoever established between assessee company and Pankaj Aggarwal neither his statement provided to the assessee for rebuttal, nor the cross examination was provided. Likewise, the AO also held the companies in which the assessee company made investment and the companies to whom assessee company sold its investment as paper company without assigning any cogent reason or material facts/evidence. The AO in his finding discussed the trail of fund in case of one company namely M/s Bignull Goods Pvt Ltd (BGPL) to whom assessee company sold its investment for Rs. 1.4 crore in the A.Y. 2015-16. The AO found that just before making payment to the assessee company the bank of BGPL was credited for same amount from different persons in whose bank account cash was deposited. Accordingly, the AO presumed I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 33 the cash deposits in the bank account of the person who transferred fund to BGPL are unaccounted cash of Cube-Group of companies without establishing nexus between those person and cube-group. The AO further presumed the entire sale proceeds on investment which received from more than 30 different companies as unaccounted money of cube group. It is settled position of law that the no income can be assessed based on presumption, surmise, and conjecture whatsoever strong it is. In the case on hand, the entire basis of AO treating the sale proceeds as unaccounted money of cube group are based on presumption and surmises. 20.4 Further, the AO lost the sight to the fact that the assessee company was having fund in the form of share capital and premium which was invested in the shares of different companies and finally the investment was sold, and the amount was lent to the cube group as loan. Thus, the origin of funds in dispute starts when the assessee company issued shares in the A.Y. 2011-12. Therefore, any action or doubt can only be raised at origin i.e. in A.Y. 2011-12. However, we note that the AO has made the addition of the credit of share capital along with premium in the A.Y. 2011- 12 which has been deleted by us on technical ground vide paragraph no. 10.4 of this order. In our considered opinion, the same amount cannot be added again in the year under consideration in the hands of the assessee company. In view of the above and considering the facts and circumstances on record, we do not find any reason to interfere in the finding of the learned CIT(A). Hence, the grounds of appeal of the Revenue for both the assessment years viz 2014-15 and 2015-16 are hereby dismissed. 21. In the result, both the appeals of the Revenue are hereby dismissed.” 18. Respectfully following the ratio of the above judgments rendered by the Jurisdictional High Court and co-ordinate Bench of the Tribunal, we have no hesitation in confirming the order passed by the Ld. CIT(A), who deleted the addition made by the Assessing Officer u/s. 68 of the Act. Thus the grounds raised by the Revenue are devoid of merits and the same is dismissed. I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 34 19. In the result, the appeals filed by the Revenue in IT[SS]A Nos. 73 to 75 & 136/Ahd/2021 & ITA No. 205/Ahd/2021 in the case of M/s. Sphere Cube Infrastructure Pvt Ltd are hereby dismissed. Similarly the appeals filed by the Revenue in IT[SS]A Nos. 76 & 77/Ahd/2021 & ITA No.157/Ahd/2021 in the case of M/s. Sancube Infra Projects Pvt Ltd are also hereby dismissed. IT(SS)A Nos. 107, 108 & ITA No. 190/Ahd/2021 filed by SCIPL for the Assessment Years 2011-12, 2012-13 & 2015-16 20. The Registry has noted that there is a delay of 83 days in filing the above appeals. The appeals are filed by the assessee on 10.08.2021. This period falls under COVID-Pandemic situation, thus following Hon’ble Supreme Court judgment dated 23.9.2021 in M. A. No. 665 of 2021 in suo-moto Writ Petition (Civil) No.3 of 2020, the Hon’ble Supreme Court has excluded time limit for filing appeals from 15.3.2020 till 02.10.2021. Thus, there is no delay in filing the above appeals and we take up the assessee appeals for adjudication. 21. The Grounds of Appeal raised by the Assessee for the Assessment Year 2011-12 reads as under: 1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs.20,00,000/-, being disclosure made during the course of search proceedings against the alleged on money received, without giving benefit of claiming of expenditure and setting off of carried forward loss (Claimed in return of income filed u/s.153A) for A.Y. 2011-12. 2. It is therefore prayed that against the above addition confirmed learned Commissioner of Income-tax (Appeals), benefit of claiming of expenditure and setting off of carried forward loss should be granted in the interest of principle of natural justice. I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 35 3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 21.1. The Grounds of Appeal for the Assessment Years 2012-13 & 2015-16 are identical except in change in figures namely confirming the additions on account of receipt of On-money of Rs.80,00,000/- and Rs.2,50,00,000/- for the respective Asst. Years 2012-13 & 2015-16. 22. Ld. Counsel Mr. K.P. Singh appearing for the assessee reiterated the submission made before the lower authorities and claimed that the Ld. CIT(A) has erred in confirming the additions of Rs.20 lacs, Rs.80 lacs and Rs.2.50 crores being the disclosure made by the assessee during the course of search proceedings against the alleged on-money received, without giving benefit of claiming of expenditure and setting off of carried forward loss (claimed in the Return of Income filed u/s.153A) for Asst. Years 2011-12, 2012-13 and 2015-16. Alternatively the entire on-money receipt should not be added, but only the profit attributable to the on-money should alone be taxed and relied upon decisions of the co-ordinate Bench of this Tribunal in the case of [a] Padmavati Housing Corporation -Vs- DCIT in IT[SS]A Nos.39, 40 & 278/Ahd/2019 dated 06-01-23; [b] Abhishek Corporation -Vs- DCIT dated 04-08-1998 and [c] DCIT -Vs- Adarsh Industrial Estate P Ltd. in ITA No.2887/ Mum/ 2019 dated 11-06-2021. 23. Per Contra Ld CIT DR A.P. Singh appearing for the Revenue supported the order passed by the Ld. CIT(A) and the same does I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 36 not require any interference and the entire on-money declared by the assessee liable to be taxed. 24. We have given our thoughtful consideration and perused the materials available on record including the synopsis and case laws filed by the assessee. We find merits in the submission of the assessee that the entire on-money receipt should not be added, but only the profit attributable to the on-money should alone be taxed. 25. The Jurisdictional High Court judgment in the case of CIT vs. President Industries wherein it has held that the amount of sales by itself cannot represent the income of the assessee, who has not disclosed the sales, only the net profit embedded in sales and not whole sale proceeds itself would be treated as undisclosed income of the assessee. This ratio is been followed in the case of ITO Vs. Anand Builders wherein Co-ordinate Bench of this Tribunal held that in such circumstances, 8% of the unaccounted on money could be taxed in place of the entire unaccounted on money receipts since there is always the unaccounted payments. The above decision of the Hon’ble ITAT was upheld by the Hon’ble Gujarat High Court and the SLP filed against the judgment before the Supreme Court was also dismissed and reported in 265 ITR 37 held as follows: “Dismissed the special leave petition filed by the Department against the judgment dated January 21, 2002 of the Gujarat High Court in ITA No, 52 of 2002 whereby the High Court dismissed the Department's appeal on the ground that no substantial question of law arose. The question of law raised in the appeal before the High Court was whether the Appellate I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 37 Tribunal's finding while directing the Assessing Officer to tax only 8 per cent of the unaccounted on money receipt instead of fully taxing it, in the absence of any evidence of expenditure, could not be stated to be perverse. ITO Vs. Anand Builders: SLP (C) No. 14166 of 2003.” 26. Further the decision of Mumbai Bench Tribunal in the case of DCIT Vs. M/s. Adarsh Industrial Estate Pvt. Ltd. in ITA No. 2887/ Mum/2019 held as follows: “.....3.4. We also find that in yet another group company of the assessee emanating out of the same seized material arising out of same search and on similar addition in the case of Bhalchandra Trading Pvt. Ltd., vs. DCIT in ITA No.2977 & 2978/Mum/2019 for A.Yrs 2013-14 and 2014-15 respectively dated 25/02/2021 (authored by the undersigned), this Tribunal had directed the Assessing Officer to add only 12% of on-money receipts as undisclosed income of the assessee being the profit element embedded thereon. Once the profit is sought to be taxed, there cannot be any addition that could be made u/s. 68 of the Act. We find that the ground of the Revenue is that the addition should have been made u/s.68 of the Act. In the instant case, the nature and source of credit being on money receipt has been duly established and same has been accepted by the Revenue. Once, the nature and source of the credit has been duly proved by the assessee, there cannot be any addition that could be made u/s.68 of the Act. Infact, in the instant case before us, the ld. CIT(A) had indeed called for a remand report exclusively on this aspect of applicability of provisions of Section 68 of the Act from the ld. AO. The ld. AO had indeed accepted the fact that on money receipts had been received by the assessee from sale of flats and even the name of the parties had been duly mentioned by the ld. AO in the remand report and merely because PAN was not mentioned and the confirmation from those parties for making payment of on-money to the assessee was not available, the ld. AO had not accepted to the contentions of the assessee in the remand report. The ld. CIT(A) on these facts and circumstances accepted to the plea that the on-money receipts should get taxed only as business receipt of the assessee as it is admittedly received from the sale of flats to various parties by the assessee and thereafter, proceeded to estimate the profit element thereon @25% as against 100% adopted by the ld. AO. While doing so, we find that the ld. CIT(A) had categorically stated that the provisions of Section 68 cannot be I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 38 made applicable to the said on-money receipt. Since the nature and source of credit being on money receipt received from sale of flats had been duly accepted by the ld.AO in the remand report, the same would construe only business receipt and not cash credit u/s.68 of the Act and accordingly, the ground No.1 raised by the Revenue for both the years on this limited aspect, deserves to be dismissed. 3.5. In view of our aforesaid observations and respectfully following the aforesaid decision of the Tribunal in the sister concern cases of the assessee group on identical facts and circumstances emanating out of the same seized material and same search, we direct the ld. AO to add only 12% of the on-money receipts as undisclosed income of the assessee. Accordingly, the grounds raised by the Revenue are dismissed and the grounds raised by the assessee are partly allowed.” 27. The decision of Ahmedabad Bench Tribunal in the case of Padmavati Housing Corporation Vs. DCIT in IT(SS)A No. 39/Ahd/ 2019 held as follows: “..8. Considering the above admitted facts, it is clear that the factual contentions made by the ld.counsel of the assessee with respect to the on- money received appears to be correct. The table reveals and as contended by the ld.counsel for the assessee before us also that, on-money components on the sale of these bungalows approximated on an average more than 50% of the price at which bungalows were booked as sold. Also the built up area of the bungalows sold approximates 160 sq. metres. Having noted these facts, we agree that it is highly improbable in this line of business to make profits upto the extent of 50% or more of the turnover that too on sale of such small sized properties. Even the Ld.DR was unable to enlighten us with statistics showing otherwise. We therefore agree with the ld.counsel for the assessee that making addition of the entire on-money received by the assessee would not be justified. Though we are of the view that the onus is on the assessee to show what expenses have been incurred by it in cash, which have also remained unexplained, but at the same time noting the fact that bungalows sold by the assessee were not hi-end properties, but small sized bungalows the component of the on-money received on the same @ 50% of the booked price is on a palpably very high side. We are of the view that in the light of I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 39 the facts and circumstances, as noted above by us, it would be just and reasonable to restrict the addition to the extent of profit element embedded in this transaction only. The AO is directed to restrict the addition by estimating GP on the on money receipts, at the higher of the rate in this line of business or as agreed to by him before us @ 15% thereof.” 28. Thus respectfully following the above judicial precedents we direct the Assessing Officer to make addition at 12% on the undisclosed income of Rs.3.5 crores admitted by the assessee on account of On-money received by it on sale of shops relating to the Asst. Years 2011-12, 2012-13 and 2015-16, and the appeals filed by the assessee are partly allowed. 29. In the result, the appeals filed by the assessee in IT(SS)A Nos. 107, 108 & ITA No. 190/Ahd/2021 filed by M/s. Sphere Cube Infrastructure Pvt Ltd are partly allowed. 30. In total the appeals filed by the Revenue in both the cases of M/s. Sphere Cube Infrastructure Pvt Ltd and M/s. Sancube Infra Projects Pvt Ltd are hereby dismissed and the appeals filed by the assessee in the case of M/s. Sphere Cube Infrastructure Pvt Ltd for Asst. Years 2011-12, 2012-13 & 2015-16 are partly allowed. Order pronounced in the open court on 30 -06-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 30/06/2023 I.T.(SS)A Nos. 73 to 75/Ahd/2021 & Ors. A.Ys. 2011-12 to 2015-16 Page No ACIT Vs. M/s. Sphere Cube Infrastructure Pvt. Ltd. and Ors. 40 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद