Rakesh Natwarlal Thakkar Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that addition towards unaccounted cash receipts on the basis of seized documents i.e. rough notes duly supported with corroborative evidence sustained.
Facts- The assessee was engaged in construction of real estate project namely “Aainaz Avenue” through his proprietary concern namely M/s SV Group Builders and Developers. The assessee was also running another proprietary concern namely M/s R.N. Traders, which was engaged in wholesale trading of food grain. For the year under consideration, the assessee filed return of income electronically on 23.01.2013 declaring total income at Rs.3,11,580/-. The return of income filed by the assessee was selected for scrutiny. AO observed that assessee was a part of ‘Thakkar Group” on which a search action u/s 132 of the Income-tax Act, 1961 was carried out on 22.02.2012. AO, on the basis of documents seized during the course of search concluded that assessee received unaccounted cash amounting to Rs.12,93,860/ -on sale of a flat. CIT(A) upheld the addition. Being aggrieved, the present appeal is filed.
Conclusion- Held that onus was on the assessee to produce a report from hand writing expert that said paper is not in his hand writing and provide name of the person who has written the said paper, but no such documentary evidences have been filed except this argument, hence same is rejected.
We are of the opinion that no such ground has been raised by the assessee and therefore, the Ld. Counsel of the assessee cannot surprise the respondent i.e. the ld. DR by way of raising this arguments at last moment. The Ld. Counsel has not filed any documentary evidence in support of his contention also. This argument was not raised at the stage either of the Assessing Officer or the Ld. CIT(A).The Ld. DR submitted had such an argument was raised by the assessee before the Assessing Officer , the Revenue could have taken care of the argument and could have assessed the addition in the year of the completion on the basis of the protective basis. We agree with the contention of the Ld. DR and therefore, we reject this contention of the Ld. Counsel of the assessee. The Ld. DR has submitted that this document is not a dumb document and has been properly analysed with supporting corroborative evidence. In our opinion, not recording any statement or any inquiry from the buyer, also cannot render the addition as not in accordance with law, particularly when the entries recorded in the seized document are corroborated with registered sale agreement. In view of the above discussion, we uphold the finding of the Ld. CIT(A) on the issue in dispute. Accordingly, the grounds raised by the assessee are dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against order dated 13.09.2019 passed by the Ld. Commissioner of Income-tax (Appeals)-11, Pune, [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds:
1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax erred in retaining the addition of a sum of Rs.12.83,860/- madesuby. the Deputy Commisioner of Income Tax as unaccounted cash receipts from sale of flat to one Suresh A. Jadhav based merely on selective scribbings in rough note de hors any corroborative findings which is legally not justified.
2. Alternatively and without prejudice to the above ground it is submitted that the learned CIT(A’ erred in sustaining addition of the entire sum of Rs. 12,83,860/ –being alleged unaccounted cash receipts from sale of flat to Suresh A.Jadhav which is not justified, as only a reasonable percentage of such receipts should be considered as “income” and not the entire receipts as gross receipts cannot be income earned.
2. Briefly stated, facts of the case are that during relevant assessment year, the assessee was engaged in construction of real estate project namely “Aainaz Avenue” through his proprietary concern namely M/s SV Group Builders and Developers. The assessee was also running another proprietary concern namely M/s R.N. Traders, which was engaged in wholesale trading of food grain. For the year under consideration, the assessee filed return of income electronically on 23.01.2013 declaring total income at Rs.3,11,580/-. The return of income filed by the assessee was selected for scrutiny. The Assessing Officer observed that assessee was a part of ‘Thakkar Group” on which a search action u/s 132 of the Income-tax Act, 1961 (in short ‘the Act’) was carried out on 22.02.2012. The Assessing Officer, on the basis of documents seized during the course of search concluded that assessee received unaccounted cash amounting to Rs.12,93,860/ -on sale of a flat. In view of no response/reply on the part of the assessee, the
Assessing Officer, after analyzing the entries referred in the seized document, made addition of Rs.12,83,860/ – along with other additions as discussed in the impugned assessment order dated 31.03.2015. On further appeal, the Ld. CIT(A) in a detailed finding upheld the addition of Rs.12,83,860/ -. Aggrieved with the finding of the Ld. CIT(A) on the issue in dispute, the assessee is in appeal before the Tribunal by way of raising grounds as reproduced above.
3. Before us, the assessee has filed a fact sheet along with a Paper book containing pages 1 to 8.
4. The Ld. Counsel of the assessee supported the grounds raised by the assessee and submitted that the Ld. Assessing Officer has made addition on the basis of a scribbling in the loose sheet which is a rough noting of estimates. The Ld. Counsel of the assessee submitted that dehors any corroborative evidence, these scribbling on rough notes cannot be the sole basis for addition for undisclosed income. In support of contention of the Ld. Counsel of the assessee relied on the decisions of the ITAT in the case of Raj Homes S.V. Group in ITA no. 2408/Mum/2017 wherein the Tribunal has relied on the decision of Hon’ble Supreme Court in the case of CIT v. P.V. Kalyanasundaram [2007] 294 ITR 49 (SC) .
4.1 The Ld. Counsel further submitted that it is a normal practice in the case of builders that whenever a prospective buyer visits the site,an estimated value is providedon a piece of the paper and explained to himwith details of various charges for acquiring the property/flat. The Ld. C ounsel submitted that when the buyer of the flat under reference i.e. Mr. Suresh A. Jadhav , visited the assessee, he explained the details of various charges for acquiring the flat. The ld. Counsel submitted that scribbling might be one of the said papers.
4.2 The Ld. Counsel further submitted that no defect whatsoeve, r has been found in the books of accounts of the assessee in the preceding year and the succeeding year and the profit offered by the assessee has been accepted.
4.3 Further, the Ld. Counsel of the assessee submitted that no evidences have been found in the search or later and the addition has been made on the presumption. The Ld. Counsel of the assessee further submitted factual information and written arguments as under:
1. “A sum of 3,55,000/- was only received from Suresh Jadhav upto 31 st March, 2012 as evident in the final accounts filed with the return of income and hence on 08/11/2011 the paper was not written or date is immaterial.
2. The paper also contains date 19th March, 2012 and hence it was not written on 8th November, 2011
3. Area of the flat is 303.40 sq feet carpet and salable area given is 493.sq feet.The flat has a terrace of 330 feet and accordingly by adopting 50% area for the terrace area worked out is 658 sq. feet.
It is difficult to get a price of 50% of sale price for terrace on 1st floor and hence it was merely a quotation given and working was done. Actual realization appears in books. Such quotation does not indicate any receipt or commitment.
4. The learned CIT(A) on page 6 of his order states as follows :
“The first cash payment shown is Rs. 1,50,000/-and subsequently it is shown that 8 drafts of Rs.49,000/ – each totaling Rs.3,92,000/ has been paid leaving a balance of Rs.7,41,860/- to be paid and subsequently 5 drafts of Rs.49,000/ –totaling Rs.2,45,000/- has been paid and another 4 drafts of Rs.49,000/ – each totaling Rs. 1,96,000/ – has been paid leaving a balance of Rs.3,00,860/ which is again paid by 4 drafts of Rs.49,000/ – each totaling Rs. 1,96,00– 0/- leaving a balance of Rs.1,04,860/” From above conclusion arrived at it is evident that payments are made by draft.In such a case the payment cannot be said as unaccounted or in cash. The conclusion arrived at is totally incorrect as there can not be payment by draft and same is unaccounted. The projections/ estimates/jottings made if any can not lead to a conclusion that payment was made by bank draft and that to unaccounted. Hence there was no cash payment as presumed.
5. It may further be noted that the appellant has merly received booking amount for some flats agreed to be sold and construction has just commenced. Sales have been effected in A.Y.2014-15, A.Y.2015-16 and hence there was no sale made in this year and hence there can not be any income which had arisen in this year as consideration for sale to said Mr.Suresh Jadhav has been received in F.Y.2011-12, 12-13 and 13-14 by cheques on various dates. Therefore presumption that sum of Rs. 12,83,860/ – was received in this year can not betrue.
6. Your attention is drawn to the attached judgment in the case of CIT V. P.V.Kalyansundaram (2007) reported at 294 IT 49 which makes it clear that the addition solelv based on loose paper scribbling de horce any corroborate finding is not justified.
7. Moreover as evident in the order of CIT(A) a declaration was made by uncle of the appellant of Rs.5,00,000/ – on behalf of appellant. Appellant noticed that there was no such discrepancy is his records. He therefore did not offer any additional income and addition of Rs.5,00,000/ – made by A.O was directed to be deleted by CIT(A)in his order. This also establishes that there was no cash consideration. ”
5. On the contrary, the Ld. Departmental Representative (DR) referred to the said seized document, which was inventories ed by the search team at page No. 9 of Bundle No. 1 seized from party TB-2, which contains details of cash receipts of on money of Rs.12,83,860/- for flat No. 1 , Ground floor having area of 658 sq. ft. and sold @ Rs.3800/ – per sq feet; and therefore,sale amount was computed at Rs.25,00,400/ -. The Ld. DR submitted that this page contains details of ratio of 60:40 and accordingly , the sale amount has been bifurcated into category “A”i.e. by cheque, of Rs.15,00,240/- and category “B” i.e. by cash, of Rs.12,8 3,860/(40% sale amount + development charge, legal charge, parking etc. mentioned on the page). The Ld. DR submitted that there are following corroborative evidences:
