No addition based on Loose papers on mere suspicion without any corroborative evidence

Mansukh Timbadia Vs ACIT (ITAT Pune)

In this case scrutiny of entries of seized loose papers reveals that the transactions noted thereon were not genuine and have no evidentiary value for the reason no clear details concerning the AY consideration are ascertainable as rightly pointed by the ld. AR as it establishes estimations only. This is apparent from the impugned order that the CIT(A) recorded a finding that the transaction noted in the seized papers as relied on by the AO were not genuine. Therefore, in our opinion, there was no document to show the payment of such a huge cash payment of Rs.34,36,00,000/- and the evidence of a third party which was retracted is clearly inadmissible and insufficient to prove any such huge cash payment. Coming to the vehement arguments of ld. DR, a mere suspicion that the real estate business are prone to take part on sale amount in cash is not a ground to accept such a huge cash payment was received by the assessee specially when such payment had not been supported by any other evidence.

26. There had been no corroborative evidence and no adverse inference could be drawn against the assessee in terms of alleged entries of loose papers. Unless it is established on record that as a matter of fact the cash payment as alleged by the respondent-revenue did pass to the assessee from M/s. Krupa Land Pvt. Ltd. it cannot be said respondent-revenue had any right to make any addition. On perusal of the statement of Dilip Dherai at Page No. 135-14 1 of paper book and no conclusion can be drawn that the entries in loose papers belongs to assessee representing cash payment. Even the CIT(A) clearly held in the impugned order at para 3.11 at page 20, that the AO squarely failed to carry out necessary investigation/enquiries from the buyer M/s Krupa Land, meaning thereby, the CIT(A) also discredited the entries alleged to have been found in the seized loose papers of annexure 1-4, as dumb documents. When the seized loose papers Annexure 1 to 4 by itself, in our opinion, did not indicate receipt of alleged cash payment and no relevancy to the year under consideration, therefore, addition confirmed by the CIT-A to the extent of Rs.3,33,06,667/- is not justified. Thus, ground Nos. 1 to 3 and connected  ground no.5 raised by the assessee are allowed. Ground No. 4 requires no adjudication in view of our decision in additional ground.

FULL TEXT OF THE ORDER OF ITAT PUNE

These two appeals by the assessee and Revenue against the common order dated 30-10-2015 passed by the Commissioner of Income Tax (Appeals)-2, Thane, [‘CIT(A)’] for assessment year 2008-09.

2. We find the issues raised in both the appeals are similar basing on the same identical facts. Therefore, with the consent of both the parties, we proceed to hear both the appeals together and to pass a consolidated order for the sake of convenience.

3. First, we shall take up appeal of assessee in ITA No. 1713/PUN/2015 for A.Y. 2008-09.

4. The ld. AR, Smt. Hiral Sejpal submits that the assessee raised additional ground No. 1 questioning the validity of reassessment u/s. 147 of the Act is invalid for non-issuance of notice u/s. 143(2) of the Act. She submits that the said additional ground purely raises a question of law and no facts are requires to be brought on record and prayed to admit the same and adjudicate the additional ground of appeal as preliminary issue and placed reliance in the case of National Thermal Power Corporation Vs. CIT reported in 229 ITR 383 (SC). Upon hearing both the parties and as no objection as reported by the ld. DR, we proceed to adjudicate the additional ground raised by the assessee as preliminary issue.

5. The ld. AR drew our attention to the paper book containing 99 pages and submits that the assessee filed return of income on 27-12-2008 and the same was processed u/s. 143(1) of the Act vide intimation dated 15-02-2010 The ld. AR drew our attention to the Page Nos. 32 and 34 of the paper book and argued that the AO issued the said notices both dated 01- 05-2013 and no notice issued subsequent to the letter dated 18-01-2014 filed by the assessee requesting the AO to treat the original return filed in response to notice u/s. 148 of the Act. She argued that the AO failed to issue notice u/s. 143(2) of the Act after filing of return of income vide letter dated 18-01-2014 by the assessee in response to notice u/s. 148 of the Act and the issuance of notice u/s. 143(2) is mandatory. Non-issuance of notice shall invalidate the reassessment made u/s. 147 of the Act. She referred to the decision of Hon’ble Supreme Court in the case of ACIT Vs. Hotel Blue Moon reported in 321 ITR 362 (SC) and submits that omission on the part of assessing authority to issue notice u/s. 143(2) of the Act cannot be procedural irregularity and the same is not curable, requirement of notice u/s. 143(2) of the Act cannot be dispensed with. Further, drew our attention to the decision of Hon’ble High Court of Bombay in the case of Geno Pharmaceuticals Ltd. Vs. ACIT reported in 32 taxmann.com 162 and submits that the notice u/s. 143(2) is mandatory while adjudicating the assessment proceedings u/s. 148 of the Act and in the absence of which, the AO cannot proceed to make an inquiry on the return filed in compliance with the notice issued u/s. 148 of the Act. Further, she submits that the provisions u/s. 292BB are not applicable as it is a deeming section saves the AO in a case where the notice issued and there is a discrepancy as regards the service of the notice.

6. The ld. DR, Shri Sardar Singh Meena submits that the said assessment reopened on an intimation received from Central Circle and the AO issued notice u/s. 148 of the Act on 12-06-20 12 which was received by the assessee on 15-06-20 12. The ld. DR drew our attention to the provisions u/s. 148 of the Act and argued that the assessee required to file the return of income in response to notice u/s. 148 of the Act in prescribed time i.e. within 30 days. The ld. DR drew our attention to the chronology of events and submits that the notice u/s. 148 of the Act was issued on 12-06-2002 and the assessee has to file return within 30 days i.e. 12-07- 2012. The assessee did not file any return of income in response to notice u/s. 148 but the AO issued notice u/s. 143(2) and 142(1() both dated 07- 08-20 12 and passed assessment order on 18-03-20 14. He argued that if the assessee does not file return of income within 30 days and request the AO to treat the original return as in response to notice u/s. 148 beyond 30 days, the AO has to treat that no ROI filed. The ld. DR drew our attention to the letter dated 18-01-2014 and argued that the assessee requested the AO to treat the original ROI dated 30-12-2008 to be the ROI in response to notice u/s. 148 of the Act which is beyond 30 days from the date of service of notice u/s. 148 of the Act and no requirement of issuance of notice u/s. 143(2) of the Act is required in response to such letter dt:18-01-2014, the assessee is not entitled to raise non-issuance of notice u/s 143(2) of the Act. The ld. DR placed reliance on the order of Delhi Tribunal in the case of Rakesh Aggarwal Vs. ITO in MA 249/DEL/2020 in ITA No. 2461/DEL/2019 for A.Y. 2010-11 vide order dated 15-12-2020 and a decision of Hon’ble High Court of Madras in the case of Home Finders Housing Ltd. Vs. ITO reported in 404 ITR 61 1(Mad.).

7. Heard both the parties and perused the material available on record. We note that the assessee filed return of income u/s. 139(1) of the Act on 30-12-2008 which was processed u/s. 143(1) of the Act vide order dt: 15-02-2010. Thereafter, on receipt of information the AO reopened the assessment by issuing notice u/s. 148 of the Act on 12-06-20 12. The contention of ld. DR is that the assessee required to file return of income or a letter requesting the AO to treat original return as return of income in response to notice u/s. 148 of the Act, as the case may be, within 30 days from the date of receipt of said notice. Admittedly, there is no dispute with ld. AR that the assessee filed letter dated 18-01-2014 which is beyond 30 days from the receipt of service of notice u/s. 148 of the Act, therefore, according to Ld. DR, no notice u/s. 143(2) is required to be issued in response to such letter, the AO treating the original return as on record, rightly issued notice u/s. 143(2) and 142(1) both dated 07-08-2012. We find, as relied by the Sri.S.S.Meena, Ld.DR, the Delhi Tribunal in the case of Rakesh Aggarwal (supra) vide Para No. 8 held the onus of filing of ROI on the assessee is a responsibility which is cast upon him to be fulfilled by him, if he fails to take benefit of any of the provisions of law, the assessee cannot plea that the notice u/s. 143(2) should have been issued. In the present case, the assessee filed a letter dated 18-01-2014 requesting to treat the original return of income as in response to notice u/s. 148 of the Act. Since, the same is beyond specified time the AO cannot take cognizance of the same and proceeded with the assessment considering the notices issued u/sec 143(2)& 142(1) of the Act on 07-08-2012. Therefore, the contention of ld. AR that no notice u/s. 143(2) issued subsequent to the letter dated 18-01-2014 is not acceptable and rejected. Thus, the additional ground No. 1 raised by the assessee is dismissed.

8. Now, on merits, ground Nos. 1 to 3 raised by the assessee are relating to confirmation of addition on account of alleged cash receipts on sale of land to M/s. Krupa Land Ltd. That the issue raised in Gr.No’s 1to 3 by the assessee and grounds 1 & 2 raised by the Revenue in its appeal are interlinked involving the part relief granted by the CIT-A. Therefore, we make it clear, the discussion by us hereunder is applicable to Revenue appeal also.

9. Brief facts relating to the issue on hand are that a search and survey operation was conducted in the cases of Jai Corp Group on 05-03-2009 u/s. 132 of the Act. The said search was conducted on its employees and close associates involved in the process of acquiring land. According to the AO, plethora of incriminating evidences were gathered during search operations on many places and at the residence of Mr. Dilip Dherai. M/s. Krupa Land Ltd. is belonged to Jai Corp Group. The said company had purchased various lands from the assessee in Nevali village, the details of which mentioned here under:

10. On perusal of the above chart, we are concerned with item’s 1&2 involving AY:08-09 involving 8.70 & 3.79 acres, both deeds dt:06-1 1-2007.

11. We note that the AO observed at para 6.1, there is a clear mention of payment of Rs.2 crore to assessee for Nevali village on 15-10-2008 and 20- 10-2008 by Krupa Land Pvt. Ltd. and also cash receipts duly signed by the assessee for a sum of Rs.20,00,000/-. Further, an unaccounted cash of Rs.24,36,00,000/- for sale of land of 8.70 acre and Rs.10,00,00,000/- for sale of land of 3.79 acre totaling to Rs.34,36,00,000/- was accepted by the We note that it was denied by the assessee before the AO the receipt of said Rs.34.36 crores in cash or even otherwise and profit thereon on Nevali land was offered to tax under scrutiny assessment u/sec 143(3) of the Act. It was also contended that the seized documents were found from third party cannot be basis for reassessment in the hands of assessee and also disputed the seized material confronted by the AO regarding highly improbable and impossible received by the assessee. The AO found the explanation offered by the assessee not acceptable and since no expenditure was claimed, the AO added an amount of Rs.34,36,00,000/- to the total income of the assessee under reassessment passed u/s. 143(3) r.w.s. 147 of the Act vide order dt:18-03-2016. The CIT(A) considering 40:60 ratio as it is discussed in the impugned order at Page No. 19 held the 40% of cash amount workout at Rs.3,33,06,667/- admitted to had been received by the assessee vide seized documents and deleted the remaining addition of Rs.31,02,93,333/- (Rs.34,36,00,000/- – Rs.3,33,06,667/-), that’s how, the assessee and Revenue before us by above said two appeals.

12. The ld. AR, Smt Sezpal, submits that the AO mainly relying on statement of Dilip Dherai and by relying on loose papers seized during the search on Jai Corp Group and the residence of Dilip Dherai, made addition on the basis of cash flow sheet and computer generated documents seized from third party premises. The ld. AR drew our attention to Page Nos. 41 to 118 and submits that the assessee sold land to M/s. Krupa Land Pvt. Ltd. by three Deeds of Conveyance all dated 06-11-2007 and offered profit on such sale to tax. Further, she drew our attention to Page No. 99 and submits that the total consideration vide two chesques in the hands of assessee is Rs.78,72,500/- which was considered by the CIT(A) in the impugned order at Para No. 3.11 at Page No. 20. She referred to Q. No. 2 at Page No. 135 submits that the said Dilip Dherai is nowhere connected to the assessee and he was Chemical Engineer working with Reliance Industries Limited (RIL) as a Consultant till date. The AO made reassessment on presumption revolving around the statement of said Dilip Dherai and loose papers found at his premises. She also drew our attention to Q. No. 4 and submits that the said Dilip Dherai clearly admitted that he was a Consultant for RIL and not an employee of Jai Corp Group. He also denied involvement of cash payment vide search to Q. Nos. 8 and 12.

13. Smt. Sezpal argued that the AO failed to examine the transaction with M/s. Krupa Land Pvt. Ltd. to substantiate his stand or to ascertain whether the cash payments were made or not. The AO did not examine the said Dilip Dherai on his retraction and did not provide opportunity for cross-examination. She referred to Annexure 2 of paper book filed by the Revenue and submits that the said piece of loose papers containing certain notings represents rough estimates or scribbling which is to be regarded as dumb documents. The AO did not make any effort to obtain any evidence to substantiate the notings in the said dumb documents. The said Annexure 2 is alleged cash flow statement and no reference as to assessee nor the period of transaction is reflected. Further, she referred to Annexure 3 at Page Nos. 2 and 3 which is considered by the Mumbai Tribunal in the batch of cases, lead case being M/s. Avkash Land Realty Pvt. Ltd. Vs. DCIT in ITA No. 8237/Mum/2011 for A.Y. 2008-09 vide order dated 22-03-2013, held that the seized material are merely projected and budgeted expenditure to be incurred and did not reveal anything which proves cash expenditure as alleged by the AO. Further, she referred the Mumbai Tribunal in the case of DCIT Vs. Shri Dilip V. Dherai in ITA Nos. 1459 to 1461/Mum/2012 vide order dated 31-07-2013, held that the entries found on loose sheet papers are only estimates/budgetary figures are not supported by actual cash passing hands. She argued the addition made in the hands of the assessee are based on seized loose papers and no other supporting evidence brought on record by the AO to show that the huge amount of such magnitude received by the assessee. The said Annexure 3 was not seized from assessee and the said Dilip Dherai was no way concerned with the assessee. Regarding Annexure 4, she submits that there has been no transaction between Dilip Dherai and assessee on 30-12-2008, no date and signature by the assessee. In all the annexures seized from Dilip Dherai are dumb documents as those were not containing the name of assessee, nature of transaction, quantum involved and period of transaction and she referred to case laws in the case of CIT Vs. Girish Chaudhary reported in 296 ITR 619 (Delhi HC), CBI Vs. V.C. Shukla reported in 3 SCC 410 (SC), Common Cause Vs. Union of India reported in 77 taxmann.com 245(SC), ACIT Vs. Shailesh S Shah reported in 63 ITD 153 (Mumbai ITAT) and Omar Salary Mohmad SAit Vs. CIT reported in 37 ITR 151 (SC).

14. Further, she argued that there was no evidence brought on record by the AO and CIT-A to prove the assessee has received cash payment. She referred to impugned order at Para No. 3.7, the CIT-A clearly held that the addition has been made on the basis of surmises and assumptions. She referred to the decisions in the case of Pradeep Amrutlal Runwal Vs. Tax Recovery Officer reported in 47 taxmann.com 293 (Pune ITAT), CIT Vs. Jayaben Ratilal Sorathia reported in 222 Taxman 64 (Gujarat HC) and ACIT Vs. Ms. Katrina Rosemary Turcotte reported in 87 taxmann.com 116 (Mumbai ITAT) and argued that on the basis of disclosure regarding on-money receipt pertaining to land selling transaction without any corroborative material in support of receipt of on-money, addition is not justified. She submits that the Mumbai Tribunal already adjudicated the validity of statement of Dilip Dherai in connected cases wherein the assessee is the alleged to have addressed as one of the parties and the Mumbai Tribunal held the action of AO was not justified in such circumstances. Therefore, the statement of Dilip Dherai on the basis of which the additions made in the hands of the assessee is to be discredited and the addition made by the AO and to the extent confirmed by the CIT-A is to be deleted and prayed to allow the grounds Nos. 1 to 3 raised by the assessee and dismiss grounds raised by Revenue.

15. The ld. DR, Sri. S.S. Meena submits that the AO analyzed the seized documents of Annexures 1 and 2 and rightly made additions in the hands of the assessee and referred to Para No. 3 of the AO. The assessee simply denied and no evidence was furnished for non-receipt of cash payments. Page Nos. 1 and 2 of Annexure 4 clearly shows the receipt of cash payment by the assessee which supports the view of AO. The ld. DR drew our attention to the signature on Page No. 1 of Annexure 4 an amount of Rs.20,00,000/- paid to the assessee. He referred to Page No. 2 of Annexure 4 and submits that the total amount of Rs.78,72,500/- was paid to the assessee regarding Nevali land full and final. He referred to signature below of Page No. 2 of annexure-4 and argued that the said signature belongs to assessee. The assessee did not give any information regarding this transaction in the return originally filed, the ld. DR referred to Para No. 7.3 of the AO and submits that the date on Page No. 1 of Annexure 2 is 30-12-2008 which is clearly legible that M/s. Krupa Land Pvt. Ltd. paid the said amount to assessee. The ld. DR rebutting the arguments of ld. AR and argued that the Annexures 1,2,3 and 4 are not dumb documents and they are speaking loudly about the transaction and receipt of cash payments by the assessee. In all the four seized annexures the signature, date and amounts which clearly shows the cash has been flown from M/s. Krupa Land Pvt. Ltd. to assessee. Every transaction involving the assessee and cash payments were recorded in the said seized documents and cannot be recorded as dumb documents. Further, he argued that all these seized documents are supplied to assessee by the AO no proper explanation was offered by the assessee. Further, the assessee did not submit Conveyance Deed intentionally before the AO and any documents seeking cross-examination of said Dilip Dherai and intentionally dragging the issue for not providing cross-examination. The ld. DR referred to Para No. 9.4 of the case law in the case of M/s. Rockson Industries in ITA No. 956/PUN/2012 order dated 30-12-2015 and prayed to dismiss the grounds raised by the assessee.

16. In reply the ld. AR argued the order in the case of Rockson Industries (supra) is not applicable to the facts on hand and referred to decision of Hon’ble Supreme Court in the case of CIT Vs. Sunita Dhadda in SLP (Civil) Diary No. 9432/20 18.

17. Heard both the parties and perused the material available on record. We note that the entire addition made by the AO revolves around the statement of Mr.Dilip Dherai recorded u/s. 132(4) of the Act and the alleged seized documents which were impounded from the residence of Dilip Dherai. Admittedly, the said Dilip Dherai is not connected with the assessee and he is said to be managing and handling acquisition operation for MSEZ and OMSEZ. The said Dilip Dherai is a Consultant for many entities from 1992 till date i.e. the date of recording of statement on 05-03-2009. In answer to Q. No. 2 in his statement, said that, he is a Chemical Engineer and Consultant to many entities. In Q. No. 4 he denied, that he is an employee of Jai Corp Group. About his primary portfolio in terms of function, he said basically a project execution man mainly for cross country pipeline/Petroleum/Gas, setting of infrastructure like pipelines etc. Further handling land acquisition by land acquisition act process in reply to Q. No. 5. In reply to Q. Nos. 9 and 12 as rightly pointed by the ld. AR, he said no, I am not aware in response to question as any cash element involved in the purchases made under MSEZ. Further, in Q. No. 18 he replied these cash payments are given to the agents in lieu of land to be procured against the security. Further, in reply to Q. Nos. 24 and 27 he said the total amounts disbursed for purchase of land through cheque along with payments made through cash disbursed through Jai corp Office and the said transaction could not be materialized as such a heavy cash was demanded by the land owners.

18. In view of the above, let us examine the seized documents, i.e. annexures 1 to 4 consisting of 7 pages at pages 34 to 40 of Revenues paper book. Annexure No-1 is a correspondence between Mr.Dilip Dherai and Mr. Sanjay Punkhia dated 30-08-2008. Ld.AR contends that the said seized document is no way concerned with AY under consideration and Ld. DR contends that it is a circumstance should be visualized taking into consideration map of village newali and krupa Land Pvt. Ltd, assessee is the beneficiary. On mere perusal of the annexure No-1, reveals, is a communication between three parties and reference of assessee is not mentioned. Further, as rightly contended by the Smt. Sezpal, that the said annexure dated: 30-08-2008, certainly to AY 09-10, but not to year under consideration. We note further, it discloses “If approved we will commit otherwise not”, so therefore, we are unable to subscribe the view contended by the Ld.DR that the assessee is the ultimate beneficiary in receipt of cash of 34 crores and the said transaction was materialized. Thus, we hold, annexure No-1 is no way concerned to AY under consideration and it cannot be relied upon. In the case of Common Cause (supra) held incriminating material in form of random sheets and loose papers, computer prints, hard disk, pen drives etc. found during search, had no evidentiary value and they could not have been relied on. In the case of Pradeep Amrutlal Runwal (supra) held AO made additions in case of assessee on basis of noting in loose papers found during search proceedings in case of third party against the name of the assessee as there was no evidence to suggest that payments were made to assessee, additions so made were not justified.

19. Next, annexure No.-2, is a chart reflecting “Received and Paid”. On perusal of the same, at ‘Received” side, for example at Sl.No- 1, it discloses, alleged payment of 52.60 received on 10- 10 without mentioning ‘year’ and in the absence of which it is difficult to ascertain to which year it belongs to and likewise, no year is mentioned from Sl. No’s 2 to 10, in view of the same, it is not safe to conclude that it is relates to AY 08-09. Further, “Paid” side, Ld DR contends that ‘MT’ stands for assessee herein. We note that admittedly, name of assessee is not clearly mentioned and the amounts mentioned therein are not clear as to whether ‘100-00’ & ‘90-00’ represents crores, lakhs or rupees and in the absence of which, even if, ‘MT’ is assessee, it is unascertainable to what the ‘100-00’ & ‘90-00’ stands for. Therefore, we could not assume that annexure No-2 is related to AY:08-09 and thus , we hold annexure No-2 could not support the view of Ld. DR and is rejected. In the case of Shailesh S Shah (supra) held addition to assessee’s income on basis of loose papers seized under section 132 proceedings, the Assessing Officer neither mentioned any material or evidence to show on what basis figures came to be worked out nor sections 69 and 69D were invoked, nor did he discharge burden to prove that alleged receipts were assessee’s income, addition being merely on basis of suspicion, could not be sustained.

20. Coming to page 1 of Annexure No-3 dt:29-08-2008 at page 35, requires no clarification, the fact remains undisputed, stamp duty & registration value for 3.79 & 8.70 acres are Rs. 1,51,60,000/- and Rs.3,48,00,000/- respectively as the negotiated price is evidenced by the conveyance deeds, both, dated 06-11-2007 at pages 41 to 118. We note that the name of Krupa Land Pvt. Ltd is mentioned and no where we find the name of assessee. We are not able to understand how this computer generated loose sheet dated 29-08-2008 is relevant to assessee, as the assessee sold his lands in the year 2007 and we cannot presume the payment is still pending. Page-2 of Annexure No.-3 dated 29-08-2008 is a computer generated loose sheet, does not convey the name of assessee and payment of cash. Page-3 of Annexure No-3 dated 29-08-2008 is also a computer generated loose sheet, does not convey the name of assessee and payment of cash. We find hand written figures in the last column which are not clear and legible, for what those stands for. We find that Mr. Dilip Dherai said the transaction could not be materialized to Q.24 and in view of the same, annexure No-3 containing 3 pages attains no significance as it not relates to the year under consideration. In the case of Girish Chaudhary (supra) held the document relied by the AO for making the addition should be a speaking one and it should contain narration in respect of various figures noted therein. Otherwise the same should be considered as dumb document on which reliance could not be placed upon. In the case of V.C. Shukla (supra) held unsubstantiated loose sheet cannot be considered as a conclusive evidence to make any addition towards undisclosed income. It was held by the Hon’ble Supreme Court that the file containing loose sheets of papers are not books and hence entries therein are not admissible u/s. 34 of the Evidence Act, 1872.

21. Lastly, page-1 of annexure No-4 dated 30-12-2008 at page-39, Ld. DR heavily relied on and contended that the name of assessee is clearly mentioned and “20L” paid. He referred to signature and argued that assesse’s signature is matching. We could not rely on annexure No-4 for the simple reason that it is dated:30- 12-2008 and is not related to the year under consideration i.e 08-09. The observation of AO at para 6.1 of his order supports the same. Therefore, annexure No-4 is of no avail to respondent revenue. Likewise, page-2 of annexure No-4, wherein, we note, that no date is mentioned and does not indicate the nature of transaction and reference of figures. In the case of Jayaben Ratilal Sorathia (supra) held AO would not be justified in making addition in year under consideration on basis of disclosure regarding on-money receipt pertaining to land selling transactions without any direct or corroborating material in support of receipt of on-money in year under consideration. In the case of Omar Salay Mohmad Sait (supra) held findings cannot be based on suspicions, conjectures, or surmises. In the case of Ms. Katrina Rosemary Turcotte (supra) held in order to make addition on account of cash component, it was the duty of AO to bring on record corroborative evidence to establish the fact that entries made in evaluation sheet were correct.

22. We are satisfied that in the instant case, the addition was made by the AO merely on the basis of presumption, surmises and conjectures. Therefore, no addition can be made on the basis of presumption in such cases. The respondent-revenue i.e. AO has made no inquiry whether any cash payment was received from M/s. Krupa Land Pvt. Ltd. or from any other source, but no material was brought on record to prove that the assessee has received cash payment and no chance was given to confront Dilip Dherai on whose statement the addition was made. Further, we find the said Dilip Dherai never stated of having cash payment to the assessee, therefore, in this circumstances, we find no addition is maintainable much less ratio of 40:60 adopted by the CIT(A). It is clear the AO made addition in a summary manner and the CIT(A) confirmed to the extent of 40:60 ratio without any basis or without any material. Further, we find the AO made no attempt to prove any corroborative evidence or specific circumstances for receipt of cash by the assessee. Therefore, the addition made by the AO and to the extent confirmed by the CIT(A) is de hors of material evidence on record. We find neither any specific statement made by Dilip Dherai nor any admission obtained from M/s. Krupa Land Pvt. Ltd. regarding the cash payments to the assessee and absolutely we note no corroborative evidence as such collected by the AO.

23. In the finding of Pune Tribunal in the case of M/s. Rockson Industries (supra) as relied on by the ld. DR, Shri Sardar Singh Meena is not applicable to the facts on hand for the reason that the concerned loose papers is found to be pertaining to the assessee therein, seizure of the same in the hands of other corroborative entity represented by one of the partners of the assessee therein. Therefore, in such circumstances, the Co-ordinate Bench held the Revenue is entitled to use incriminating evidence against the assessee therein in the given facts. Coming to the present case, the reassessment was made in the hands of the assessee on the basis of statement alleged to have been made by Dilip Dherai is a third party who is not connected to assessee herein and as discussed above no such statement or admission obtained from M/s. Krupa Land Pvt. Ltd. to whom the assessee sold his lands. Therefore, the facts in the case of M/s. Rockson Industries (supra) are distinguishable to the facts of the case in hand. Thus, the finding therein is not applicable to the present case.

24. Admittedly, Mr. Dilip Dherai retracted his statement at pages 142- 145, the retracted admission/statement could not form the basis of addition without any corroborative evidence. In our considered opinion in the absence of any other evidence renders the order of AO which was based upon retracted statement made by Dilip Dherai is null and void. Further, the ld. AR, Smt. Hiral Sejpal contested truthfulness of the statement of said Dilip Dherai and vehemently discredited his statement for want of cross-examination. If that is so, the statement of Dilip Dherai is discredited; there was no material evidence available to the respondent-revenue on the basis of which justifying the addition made in the hands of the assessee. We may note that there was no opportunity for the assessee to cross-examine the said Dilip Dherai and in our opinion; it would not be safe to rely on the statement of the said Dilip Dherai which was retracted at page Nos.142-145 and was not subjected to cross-examination. This position clearly appears established from the record. Therefore, the respondent-revenue did not make out a case against the assessee about the receipt of cash payment.

25. Further, scrutiny of entries of seized loose papers reveals that the transactions noted thereon were not genuine and have no evidentiary value for the reason no clear details concerning the AY consideration are ascertainable as rightly pointed by the ld. AR as it establishes estimations only. This is apparent from the impugned order that the CIT(A) recorded a finding that the transaction noted in the seized papers as relied on by the AO were not genuine. Therefore, in our opinion, there was no document to show the payment of such a huge cash payment of Rs.34,36,00,000/- and the evidence of a third party which was retracted is clearly inadmissible and insufficient to prove any such huge cash payment. Coming to the vehement arguments of ld. DR, a mere suspicion that the real estate business are prone to take part on sale amount in cash is not a ground to accept such a huge cash payment was received by the assessee specially when such payment had not been supported by any other evidence.

26. There had been no corroborative evidence and no adverse inference could be drawn against the assessee in terms of alleged entries of loose papers. Unless it is established on record that as a matter of fact the cash payment as alleged by the respondent-revenue did pass to the assessee from M/s. Krupa Land Pvt. Ltd. it cannot be said respondent-revenue had any right to make any addition. On perusal of the statement of Dilip Dherai at Page No. 135-14 1 of paper book and no conclusion can be drawn that the entries in loose papers belongs to assessee representing cash payment. Even the CIT(A) clearly held in the impugned order at para 3.11 at page 20, that the AO squarely failed to carry out necessary investigation/enquiries from the buyer M/s Krupa Land, meaning thereby, the CIT(A) also discredited the entries alleged to have been found in the seized loose papers of annexure 1-4, as dumb documents. When the seized loose papers Annexure 1 to 4 by itself, in our opinion, did not indicate receipt of alleged cash payment and no relevancy to the year under consideration, therefore, addition confirmed by the CIT-A to the extent of Rs.3,33,06,667/- is not justified. Thus, ground Nos. 1 to 3 and connected  ground no.5 raised by the assessee are allowed. Ground No. 4 requires no adjudication in view of our decision in additional ground.

27. Next, we shall take up appeal of Revenue in ITA No. 72/PUN/2016 for A.Y. 2008-09.

28. The appellant-revenue raised two grounds challenging the action of CIT-A in applying ratio of 40 : 60 (cash : cheque) without considering notings in the seized loose papers.

29. We note that the issues concerning the above grounds already been discussed by us in assessee’s appeal in detail in the aforementioned paragraphs in ITA No.1713/PUN/2015. We held the seized loose papers in Annexure 1 to 4 consisting of 7 pages at pages 34 to 40 of Revenue’s paper book does not indicate the receipt of cash by the assessee and no relevancy to the year under consideration, thereby deleted the addition confirmed by the CIT-A to that extent. The CIT-A, in order to come to conclusion for adopting 40: 60 ratio, squarely relied on Annexure 4 consisting of two pages. Regarding the same we discussed at para No.21 of assessee’s appeal and held that page 1 dated 30.12.2008 of Annexure 4 is not relevant to the year under consideration. In respect of page No.2 of Annexure 4 we held that no date and indication of nature of transaction with reference to figures mentioned therein is reflected. Further, the AO in his order at para No.6.1 observed that the assessee received payment on 15.10.2008 and 20.10.2008 which supports the view taken by us that the Annexure 4 is not relevant to the year under consideration. Further in para 7.1 and 7.2 the AO refers to Annexure 4 and held the last six figures of Rs.9,28,72,500/- is matching with the amount of Rs.78,72,500/- basing on which the CIT-A in the impugned order at para No.3.11 at page No.20 held that the assessee admitted to have been received 40% of cash amount amounting to Rs.3,33,06,667/- which is very close to the figures of Rs.20 lac plus Rs.78,72,500/-, in our opinion, have no basis in view of his further observation that the AO squarely failed to carry out necessary investigation/enquiry from the buyer. Therefore, with the detailed discussion in assessee’s appeal and the reasons above, we find the order of CIT-A is not justified and is set aside. Thus, ground No.1 and 2 raised by the Revenue fails and are dismissed.

30. In the result, appeal of assessee is allowed and the appeal of Revenue is dismissed.

Order pronounced in the open court on 22^nd July, 2022.