Case Law Details
ACIT Vs Laxmi Ram Khandelwal (ITAT Jaipur)
ITAT Jaipur set aside the CIT(A) order as the same being non-speaking and cryptic order which is passed against the principles of natural justice as opportunity to the AO to ascertain the correct fact was not granted.
Facts- A survey u/s. 133A of the Act was conducted at the business premises of M/s. Radha Govind Build Estate Private Limited on 18.11.2009, wherein the assessee is one of the directors. During the course of survey, one of the directors, Shri Ramesh Dangayach was examined and he admitted undisclosed income of Rs. 3,55,31,259/- in the hands of the company based on the papers impounded at the time of survey. The paper indicated undisclosed profit earned on real estate transactions of the assessee as on 26.05.2005. In the case of the company, addition was made in A. Y. 2009-10 based on admission of the director. However, before CIT(A) a claim was made by the company that date mentioned on the document was prior to its inception and thus CIT(A) directed to delete the addition in the hands of the assessee company in A. Y. 2009-10 and further directed to consider it in the respective years as reflected in the impounded document. The impounded document indicated name of the assessee as one of the four investors and recipient of the unaccounted profit earned on real estate transactions up to 26.05.2005, relevant to A. Y. 2006-07.
Thereafter, taking facts into consideration, the AO arrived at the conclusion that substantial income of the assessee has escaped assessment within the meaning of section 147 of the Act, accordingly notice u/s. 148 of the Act was issued after obtaining the necessary approval.
Based on the non-compliance of the assessee, AO after analyzing all the evidences on record and re-producing the same in the assessment order made an addition of Rs. 2,52,73,204/- being the amount not recorded as investment made in the real estate and Rs. 89,35,941/- being the profit earned and not disclosed from the real estate project. Aggrieved by the order of CIT(A), revenue has preferred the present appeal.
Conclusion- Held that CIT(A) order is not speaking and reasoned order but also cryptic against the fact already on record and the same is against the principles of the natural justice as he has given his finding without giving the opportunity to the AO to ascertain the correct fact and the same is not in accordance with the one view taken in the case of the company and therefore, we are of the considered view that the order of the CIT(A) in this case is not sustainable.
At the same time we are of the view that there require verification of the all the partners / director of the company in their individual books vis a vis the transactions recorded in the case of the company after incorporation is the same transactions or the other out of the books transactions all these require in depth verification in this case and since the same is not done by the ld. CIT(A) in this case the matter is restored back in the interest of justice to the file of the ld. CIT(A) to pass a reasoned order after giving sufficient opportunity to the parties in accordance with the law.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
These three appeals filed by the revenue aggrieved from the order of the Commissioner of Income Tax (Appeal)- 4 & 1, Jaipur [ Here in after referred as ld. CIT(A) ] for the assessment year 200607 dated 08.05.2017 & 09.08.2019. which in turn arises from the order passed u/s. 144 r.w.s. 147 dated 03.03.2014 by the DCIT, Central Circle-01 Jaipur in the case of Shri Ramesh Dangayach & Shri Laxmi Ram Khandelwal and ITO, Ward-2(3), Jaipur passed under Section 143(3) r.w.s. 147 of the Income tax Act, 1961 (in short ‘the Act’) dated 13.04.2014 in the case of Shri Griraj Agarwal.
2. Since the issues involved in all these three-appeal filed by the revenue’s is related to assessment year 2006-07, facts of these cases almost identical and the issues are almost common, except the difference in figure of additions disputed, therefore, all these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order.
3. At the outset, it was agreed that the matter pertaining to Shri Laxmi Ram Khandelwal in ITA no. 646/JPR/2017 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are exactly identical except the difference in the amount in other two cases. The ld. AR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 646/JPR/2017 is taken as a lead case of each party. Based on the above arguments we have also seen that for all these appeals are similar, facts are similar and arguments were similar and therefore, were heard together and are disposed by taking lead case facts, grounds and arguments from the folder in ITA No. 646/JPR/2017.
4. Before moving towards the facts of the case we would like to mention that the revenue has assailed the appeal in ITA No. 646/JPR/2017 on the following grounds;
“(1) Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 2,53,73,024/- on account investment in real estate.
(2) Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 89,35,941/- on account of profit on real estate.”
“The Appellant crave, leave or reserve the right to amend modify, alter add or forego any grounds(s) of appeal at any time before or during the hearing of this appeal.”
5. Original return of income for the year under consideration was filed by the assessee on 10.01.2007 with ITO, ward 2 (1), Jaipur declaring total income of Rs. 2,15,804. This return was processed u/s. 143(1) of the Act on 21.02.2007 at the declared income.
5.1 The brief facts of this case is that a survey u/s. 133A of the Act was conducted at the business premises of M/s. Radha Govind Build Estate Private Limited on 18.11.2009, wherein the assessee is one of the directors. During the course of survey, one of the directors, Shri Ramesh Dangayach was examined and he admitted undisclosed income of Rs. 3,55,31,259/- in the hands of the company, in A. Y. 2009-10 based on the papers impounded at the time of survey ( page no. 4 of Annexure A). The paper indicated undisclosed profit earned on real estate transactions of the assessee as on 26.05.2005. In the case of the company, addition was made in A. Y. 2009-10 based on admission of the director. However, before the ld. CIT(A) a claim was made by the company that date mentioned on the document was prior to its inception (06.06.2005) and thus the ld. CIT(A) vide order dated 19.10.2012 directed to delete the addition in the hands of the assessee company in A. Y. 2009-10 and further directed to consider it in the respective years as reflected in the impounded document. The impounded document indicated name of the assessee as one of the four investors and recipient of the unaccounted profit earned on real estate transactions up to 26.05.2005, relevant to A. Y. 200607.
5.2 In the meanwhile, a search action u/s. 132 of the Act was also conducted at the premises of the assessee on 25.04.2012 along with other cases of Hari Mohan Dangayach Group. Consequent to search action, the case of the assessee was centralized. The AO, ITO, ward 3 (1), Jaipur having jurisdiction over the case of the Company M/s. Radha Govind Build Estate Private Limited vide his letter dated 07.03.2013 communicated the findings of the ld. CIT(A)-1, Jaipur order dated 19.10.2012 that unaccounted profit shown in impounded document is to be treated in respective years as mentioned in the impounded papers.
5.3 In the light of the findings of the ld. CIT(A)-1, Jaipur the case records of the assessee were again examined and it was noticed by the ld. AO that the assessee is one of the found beneficiaries of profit of Rs. 2,55,31,259/-. In this profit the share of the assessee was at Rs. 89,35,941/-. In his regular return filed no such profit was disclosed. The ld. AO also observed from perusal of the impounded documents that the assessee along with other three partners had also made substantial investment / expenditure in purchase of land and other expenses amounting to Rs. 7,22,08,641/- prior to 26.05.2005. This investment / expenditure was also not reflected in his regular return for A. Y. 2006-07. Taking these facts into consideration, the AO arrived at the conclusion that substantial income of the assessee has escaped assessment within the meaning of section 147 of the Act, accordingly notice u/s. 148 of the Act was issued after obtaining the necessary approval.
5.4 In compliance to notice u/s. 148 of the Act, the assessee filed his return of income on 05.07.2013 declaring same income as was declared in the return originally filed. He did not declare any undisclosed investment as well as undisclosed profit as founded noted on the impounded document. Notices were issued from time to time in the reassessment proceeding and were served to the assessee. After taking various adjournment the ld. AR of the assessee sought copy of reasons recorded before initiation of proceedings. The same was provided to the ld. AR of the assessee and the assessee has filed the objections on re-opening of assessment and desired that before proceeding in the matter his objection be first be disposed off.
5.5 The ld. AO disposed objection raised by the assessee vide letter dated 13.12.2013 and the same were rejected after detailed reasoning given by the AO and the same was also made part of the assessment order in dispute.
5.6 Thereafter, the ld. AO noted that on 06.01.2014 and 04.02.2014 being the date of hearing of this case none attended the proceeding nor any adjournment application was moved. Based on the non compliance on the part of the assessee and the assessment being time barring the ld. AO completed the same as per provision of section 144 of the Act and was issued the show cause notice on 04.02.2014 asking the assessee to file reply and furnish details as requested vide notice issued u/s. 142(1) and case was posted for hearing on 14.02.2014. On the same date also neither the reply of the show cause notice filed nor any details were filed by the assessee.
5.7 Based on the non-compliance of the assessee ld. AO after analyzing all the evidences on record and re-producing the same in the assessment order made an addition of Rs. 2,52,73,204/- being the amount not recorded as investment made in the real estate and Rs. 89,35,941/- being the profit earned and not disclosed from the real estate project.
6. Being aggrieved from the said order of the ld. AO the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) has recorded his finding in para 3.3.2 to 4 of his order and the same is extracted here in below for the sake of brevity:
“3.3.2 I have duly considered assessee’s submission and carefully gone through assessment order. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon. I have carefully gone through the case records also.
In this regard, it is submitted that verifiable facts of case are that all the purchases of land and sales of plots transactions are recorded in the books of account of Radha Govind Build Estates P. Ltd. and Ld. A.O. had made no efforts to look into the real transactions recorded in books of accounts. It is also evident, the stated land purchased was agricultural land whereas the alleged sale is of residential plots, which can only be done after getting the conversion of land use involving approval of competent authorities and no such record/ evidence/ documents were referred to by the Ld. A.O. before arriving at the conclusion that the assessee has made undisclosed investment in acquisition of land and having income from unrecorded sale of such land., Further no effort has been made to verify the fact of ownership from the land revenue authorities as the sole allegation depends upon the ownership of land under reference alleged as purchased and sold by assessee company. Further, the amounts reflecting as profit in the impounded paper No.4 was merely an amount which was projected as profit on a future sale but that could be possible only if the land was purchased and subsequently sold. The verifiable facts are that all the purchases of land and sales of plots transactions are recorded in the books of account of M/s Radha Govind Build Estates P. Ltd. but no efforts was made during the assessment proceedings to look into the real transactions recorded in books of accounts. The real sale transaction will always be with reference to identifiable plots. Further, the impounded papers found during the course of survey operation relates projections and estimates made prior to incorporation of company or at times in course of business or relates to transaction recorded in regular books of accounts of company duly audited and audited accounts were filed along with year wise return(s) of income by assessee company.
Further, I have also taken a note of appellate order passed by Ld. CIT(A)-1 Jaipur, wherein on the basis of same set of impugned impounded documents, appeals in case of M/s Radha Govind Build Estate Pvt Ltd for AY 2007-08, 2008-09 & 2010-11, have been partly allowed, wherein it has been held that additions will have to be made, sustained/ enhanced in the hands of assessee company M/s Radha Govind Build Estate Pvt Ltd only, accordingly, no addition is required to be made in the hands of directors namely Sh Laxmi Ram Khandelwal or in the hands of Sh Ramesh Chand Dangayach.
In view of facts and circumstances mentioned above and respectfully following the decision of Ld CIT(A)-1 Jaipur in case of M/s Radha Govind Build Estate Pvt Ltd (duly considering impugned Impounded documents), no additions on ac/ of investment in land and profit arising out of it, can be made in the hands of assessee Sh Laxmi Tam Khandelwal when the same has already been considered in the hands of assessee company M/s Radha Govind Build Estate Pvt Ltd. Accordingly additions made of Rs. 89,35,941/- on a/c of share in profit from land transactions and Rs. 2,52,73,024/= on a/c of share in real estate projects. Assessee’s appeal in Gr No 3(a) & 3(b) stands allowed.
Therefore, in view of relief given in Gr No 3, proceeding initiated u/s 147 of the Act becomes academic in nature, hence not adjudicated.
3.4 Ground No. 4: “That without prejudice to the ground no. (3) above the AO is wrong and has erred in law in not allowing benefit of telescoping of investment of alleged undisclosed profit in alleged undisclosed investment/expenses.”
3.4.1 Assessee has submitted inter alia as under:
“….That without prejudice to the ground No. (3) above the assessing officer is wrong and has erred in law in not allowing benefit of telescoping of investment of alleged undisclosed profit in alleged undisclosed investment/expenses.
This ground of appeal is without prejudice to the relating grounds in ground No. 3 of the appellant and the appeal may kindly be decided accordingly….. “
3.4.2 I have duly considered assessee’s submission and carefully gone through assessment order. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon. The entire addition made by the AO on the basis of impugned impounded documents have been considered in the hands of assessee company M/s Radha Govind Build Estate Pvt Ltd, accordingly, no addition is required to be made in assessee’s hands. In view of these facts, the alternative ground has become academic in nature. Therefore, there is no need for adjudication for this ground of appeal.
3.5 Ground No. 5: “That the levy of interest u/s 234A(3) & 234B(3) on the appellant is wrong and bad in law and in also not correctly calculated.”
3.5.1 As the charging of interest u/s 234A(3) & 234B (3) of the Act is automatic, however in view of relief given in above para, AO is directed to re-compute the interest chargeable u/s 234A(3) & 2348(3) while giving effect to this appellate order.
In the result, the appeal is allowed to the extent indicated above.”
7. Aggrieved from the finding of the ld. CIT(A) the revenue has preferred this appeal on the grounds as reproduced here in above. The main grievance of the revenue is that ld. CIT(A) vide order dated 19.10.2012 while dealing with the case of M/s. Radha Govind Buildstate Private Limited held that the paper seized / impounded pertain to prior to the incorporation of company and directed to make addition in the hands of the related person and after that finding the case was re-opened in the case of the assessee. Whereas, ld. CIT(A) in this case vide order dated 08.05.2017 held that the papers in questions and transactions is part of company and this finding has been given by the ld. CIT(A) without taking into consideration the findings of the ld. CIT(A) in the case of the company and based on that finding proceeding was initiated in the case of the assessee. The ld. DR further objected the findings that given by the ld. CIT(A) is without asking reason and basis of re-opening vis a vis material on record. The ld. CIT(A) did not find it proper to call for any remand report on the factual aspects of the case. Thus, the ld. CIT(A) has not only violated the judicial consistency rule but has also violated the principles of natural justice, as the additions were not only made based on the statement of Shri Ramesh Dangayach, but based on the evidences find during the proceedings and is duly supported by the corroborative evidence where in the exact figure of the expenditure incurred in the purchase and sale of out of books transactions reflected and it cannot be considered that these are estimate of the project when the same is found correctly recorded and is supported by the statement recorded based on these evidence. Based on the evidence it was duly confirmed that the sale of plots and profit there upon were out of books. Based on this arguments he had summarily submitted that the matter be remanded back to examine the real facts of the case and if this is not done then the stake of the revenue, being higher will be much affected and in the interest of justice real fact finding on the various legal as well as factual aspect is required to be examined. Therefore, ld. DR vehemently argued for allowing one chance to safe guard the revenue be given.
8. Per contra, the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below;
“The above appeal has been filed by department against the appeal order dated 08-05-2017 passed by CIT (A) – IV, Jaipur in Appeal No. 766/2013-14. The department has raised following grounds of appeal.
“1. Whether on the facts and in the circumstances of the case the Ld. CIT (A) – 4, Jaipur was right in deleting the addition of Rs2,53,73,027/- on account of investment in real estate.
2. Whether on the facts and in the circumstances of the case the Ld. CIT (A) was right in deleting the addition of Rs.89,35,941/- on account of profit on real estate.
The appellant crave, leave or reserve the right to amend modify, alter add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal.
Facts of the case
(a) The appellant assessee is one of the director of a private company M/s. Radha Govind Buildestate Pvt. Ltd., Jaipur. The other two directors are Shri Giriraj Agarwal and Shri Ramesh Dangayach. The said company was incorporated on 06.06.2005 having main object(s) of carrying on the real estate business. Before incorporation/formation of the company the directors planned to acquire agricultural lands about 76.18 bigha to develop a residential colony/scheme. The modus operandi of this line of business is that generally every developer/person before starting the actual business and plotting at site, a paper plan of the proposed scheme/colony is prepared under an understanding with the respective land owners to purchase the land later on . Further on the basis of the said paper plan the developer(s) also starts booking of the land spaces/plots. Exactly similar modus operandi was also adopted by promoters of the said company and made out a paper plan to develop a residential colony on agriculture land of about 76.18 bigha owned by the following persons.
| Name of Land owner | Area | |
| 1. | Shri Krishan Tour Ship | 54.12 |
| 2. | Anaram Raigar | 14.04 |
| 3. | Suwa | 2.09 |
| 4. | Shyoram | 5.13 |
| 5. | Mathn/Ramchandra | |
| 6. | Mahesh Sharma | 0.06 |
| 7. | Bhura/Hanuman | 6.06 |
| 8. | Shyoram/Dula/Ramu/Chitra | 2.12 |
On the basis of the above said projection the promoters started booking of plots and received some advances from the various proposed buyers/brokers. The details of the said booking made are available in the assessment order passed by Ld. AO. The promoters on 26.05.2005 also prepared a projected statement of total estimated cost of land expenses, the plotting area estimate sale amount and the estimated profit before incorporation of company on 06.06.2005.
For better understanding the facts of the case a planning/projection chart is submitted hereinbelow:-
1. The following persons in the year 2005-06 mutually decided/agreed to form a Private Limited Company and carry on a real estate business:
Shri Laxmi Ram Khandelwal
Shri Giriraj Agarwal
Shri Ramesh Dangayach
Shri Narendra
2. Private Limited Company got incorporated on 06-06-2005
i Started to contact various land owners including schedule caste/schedule Tribes persons and succeeded to agree the following persons to sale their agricultural land holding about 76.18 bighas. The name of the land owners are verifiable/noted on the seized page No.4 referred in appellant’s assessment order under appeal.
ii On the basis of assurance given by the said land owners the promoters
made out paper plan of the proposed residential –cum-commercial scheme to be developed by them.
iii The said plan of the proposed scheme circulated in general public/prospective buyers through real estate brokers and individually by the promoters.
iv As per prevailing modus operandi of the real estate business in Jaipur some prospective buyers agreed to buy the space(s) and also advanced money to the promoters.
v Encouraged from the response of the general public the promoters made out a projected/ budgeted statement of total land spaces available of the lands to be purchased from the following persons:
| Name | Land in bigha | Rate per bigha | Amount |
| Krishna Town | 54.12 | 9.35 | 51057000 |
| Aana Ram Regar | 14.04 | 8.27 | 11743400 |
| Suva | 2.09 | 11.1 | 2719,500 |
| Sho Ram | 5.13 | 10.53 | 5949450 |
| Registration exp. | 5,80,000 | ||
| General exp. Dt.26.05.2005 | 1,65,291 | ||
| Grand Total | 76.18 | 7,22,08,641 |
vi (a) It is worthwhile to submit here that earlier there was a partnership firm under the name and style of M/s.Radha Govind Estate Constituting of the following partners:-
1) Shri Gangaram Khandelwal
2) Shri Mahesh Dangayach
3) Shri Girraj Khandelwal
4) Pramila Agarwal
vi (b) As per above legal documentary evidences it is evident and verifiable that the appellant was not a partner in the said partnership firm. As submitted above and also verifiable from the incorporation certificate of the private limited company M/s. Radha Govind Build Estate Pvt.Ltd that the said company was incorporated on 06.06.2005. Thus till the said date i.e. 06.06.2005 the appellant was not carrying on real estate business activity(s) and accordingly the transactions prior to 06.06.2005 do not pertain to him and as such legally no adverse inference/cognizance can be taken/drawn against the appellant on the basis of any noting/projection/estimates pertain prior to the said date i.e. 06.06.2005.
vii The following agricultural lands were purchased from the following persons either in the name of company or in the name associated person. The purchase consideration of the said lands is recorded in regular books of accounts. Financial year-wise details of the above land purchased by the company are enclosed herewith.
As per above particulars it is apparent and also verifiable from the seized record that before incorporation of the company there was only a paper planning/projection of the proposed residential colony scheme and neither any purchase nor any sale was made.
3. After incorporation of the company it purchased agricultural lands, carved plots and got them approved from JDA. There was no sale upto A.Y. 2009-10 (F.Y. 2008-09) and sale of plots were in A.Y. 2010-11 (F.Y. 2009-10). The details are as under: –
| Particulars | Area | Area in Sq. yds |
Amount (Rs.) | |
| Opening Stock as on 1.4.2005 | 0 | 0 | 0 | 0 |
| Add: Land purchased during the A.Y. 06-07 | 62 | 38 | 196387.4 | 18140000 |
| Closing Stock as on 31.3.2006 | 62 | 38 | 193361.4 | 18140000 |
| Opening Stock as on 1.4.2006 | 62 | 38 | 193361.4 | 18140000 |
| Add: Land Purchased during the A.Y. 07-08 | 0 | 6 | 907.8 | 200000 |
| Closing Stock as on 31.3.2007 | 62 | 44 | 194269.2 | 18340000 |
| Opening Stock as on 1.4.2007 | 62 | 44 | 194269.2 | 18340000 |
| Add: Land Purchased during the | 11 | 33 | 38278.9 | 9900000 |
| A.Y. 08-09 | ||||
| Closing Stock as on 31.3.2008 | 73 | 77 | 232548.1 | 28240000 |
| Opening Stock as on 1.4.2008 | 73 | 77 | 232548.1 | 28240000 |
| Add: Land Purchased during the | 0 | 0 | 0 | |
| A.Y. 09-10 | ||||
| Closing Stock as on 31.3.2009 | 73 | 77 | 232548.1 | 28240000 |
| Opening Stock as on 1.4.2009 | 73 | 77 | 232548.1 | 28240000 |
| Add: Land Purchased during the | 20 | 8 | 61730.4 | 11289791 |
| A.Y. 10-11 | ||||
| Total Land purchased upto | 93 | 85 | 294278.5 | 39529791 |
| 31.3.2010 | ||||
Total area in Sq. yds. (100%) – May be used in plotting 250621 Saleable area of plots – after deduction of roads & facilities 137610 Total saleable area is divided into 3 parts which is as under:-
1. Residential plots 117387.0
2. Commercial 11317.8
3. Khatedar 8983.03
Total 137688
Out of which approved by JDA in Residential Plots in A.Y. 2010-11 : 117387.14 Sq. yds
Sale of plots in A.Y. 2010-11 31076.18 Sq. yds
4 (a) That a survey u/s 133A of the I.T.Act, 1961 was conducted on 18.11.2009 at business premises of M/s.Radha Govind Buildestate Pvt. Ltd. During the course of survey on the basis of alleged incriminating documents (including page No.4 of the seized Annexure-4 on which basis the impugned addition of Rs.2,78,20,932/- has been made in case of appellant) found and seized and an additional business income of Rs.3,55,31,259/- was got surrendered in the hands of the company. The said income was also assessed by the department in the hands of the above said company in the A.Y.2009-10. Thus it is an accepted fact by the department that the said seized papers/documents including page No.4 of the seized annexure-A pertain to the Private Limited Company. As submitted in para 1(b) supra that the land mentioned on seized paper No.4 of annexure-A have been purchased by the Private Limited Company and are duly recorded in the regular audited books of accounts of the said company. The assessments of the company for the A.Y.2006-07, 2007-08 and 2008-09 have been completed u/s 143(3) of the I.T. Act, 1961 accepting the above submitted facts regarding purchase of land etc. Thus the transactions noted on page No.4 of the seized annexure on which basis the impugned addition is made in the hands of the appellant pertain to the company and not to the appellant assessee.
The appellant assessee further submits that, in respect of any transaction in land, it is well understood and expected that if any such transaction takes place, there are bound to exist certain documents and other evidences which corroborate the execution of such transaction. For example – Registered Sale deeds, Purchase deeds, relevant entries in the bank statement showing payments towards purchase of land and receipt consequent to sale of land, the entries in revenue records, names of sellers from whom purchases were made and names of buyers to whom sales were made and many other things. Further as is evident, the land stated purchased was agricultural land and whereas the alleged sale is of residential plots, which can only be done after getting the conversion of land use involving approval of competent authorities and no such record/evidence/documents were referred to by the Ld. A.O. before arriving at the conclusion that the assessee has made undisclosed investment in acquisition of land and having income from unrecorded sale of such land., Further no effort has been made to verify the fact of ownership from the land revenue authorities as the sole allegation depends upon the ownership of land under reference alleged as purchased and sold by assessee company. These are some of the evidences, which only can prove the transaction of sale and purchase of land having taken place. It is evident and must be appreciated that apart from those loose papers, not a single document of such nature was found during the course of survey nor brought on record which could substantiate the transactions in land which have been alleged to have taken place on the basis of rough scribbling on the impounded paper wherein the assessee is a party either as a buyer or as a seller.
In the absence of these evidences, any transaction recorded in whatsoever manner on an abandoned piece of paper cannot lead to an assumption that any transaction in land could have taken place. Moreover, merely on the basis of presumption, no adverse action can be taken against the assessee. In such a set of circumstances, the Assessing Officer is duty bound to bring on record evidences which substantiate the contents of the seized paper. In the absence of such corroborative evidences, the seized paper is nothing but a very feeble and weak piece of evidence or it can be said that it is equivalent to no evidence. It is well settled proposition and in fact, the basic principle of Income Tax law that it only the ‘income’ of a person that can be taxed and that income has to be ‘real’ not presumptive. Further no effort was made to locate and bring on record the whereabouts of the land stated to have been purchased i.e. the khasra no. area, location , etc. from the respective sellers, nor they have been called upon to state the real facts of the actual affairs nor any enquiry has been conducted from the buyers whose names were available with the AO in the documents which were made the basis for making the additions. Thus, by simply mentioning that assessee has made investment is not conclusive more particularly when the land is a commodity which can be identified and cannot be sold without the existence of a legally enforceable document called ownership/title deeds.
(ii) Further, the amounts reflecting as profit in the impounded paper No.4 was merely an amount which was projected as profit on a future sale but that could be possible only if the land was purchased and subsequently sold. However, no real transaction on the basis of those projections could take place and therefore, the papers become dumb piece of papers which is of no worth for the simple reason that the notings appearing on the paper are merely rough estimates which fact is clearly proved by the fact, in the expenditure entries, purchase of land, registration expenses and sales whenever made were recorded in books of accounts of company. Thus the notings on the said paper do not pertain to the appellant as an Individual but are of the above said private limited company.
From the above submission, facts it is verifiable and clear that all the purchases of land and sales of plots transactions are recorded in the books of account of Radha Govind Build Estates P. Ltd. and Ld. A.O. made no efforts to look into the real transactions recorded in books of accounts. The real sale transaction will always be with reference to identifiable plots. Perusal of impounded papers will show that specific plot numbers are not mentioned. There is no date of transaction and receipt of payment. These essential ingredients of real/genuine transaction are conspicuously absent & hence these jottings do not show real transaction. As submitted above para it is normal commercial practice in the line of real estate dealers and developers that as a marketing strategy projections are made to the entice the prospective buyers by :-
(a) Indicating sales made at certain rates, and
(b) Showing that most of the plots have been sold and that efforts could be made to persuade, those who have booked to resale the plots.
This is done by showing sales to fictitious persons and quite often to regular brokers. These papers also reflected the same and do not show real transaction. These papers are prepared for the same reason to attract the prospective buyers.
It is a fact that the normal practice in real estate business is, in case of actual sale is either through agreement to sale or registry or issue of allotment letter or issue of receipt of money received. But in this case department has not found any of such documents in support of sales made. Only on the basis of rough sheet sales cannot be determined.
5(i) As submitted in above paras that purchases of agricultural land, conversion into urban plottable land & its charges, sales made and advance received against sales all are recorded in books of accounts of the company. They impounded papers in survey relates projections and estimates made prior to incorporation of company or at times in course of business or relates to transaction recorded in regular books of accounts of company duly audited and audited accounts filed alongwith yearwise return(s) of income by assessee company. In support of the submissions made copy of following documents are enclosed:-
(i) Copy of audited statement of accounts
(ii) Copy of assessment orders passed u/s 143(3) in case of Pvt. Ltd. company.
5(ii) From the above said evidences it is crystal clear that the nottings on the above said
Impounded paper No.4 were mere projections/estimates and not the actual transactions of purchases and sales as no addition. Such the impugned addition(s) made on the basis of said projections/estimates for the land to be purchased by the private limited company is apparently grossly wrong, bad in law and in-tenable in the eyes of the law. It is, therefore, requested that the impugned additions made on presumptions, surmises and conjectures may very kindly be deleted.
Action of Ld. A.O.
The Ld. A.O. issued notice u/s 148 dated 21-03-2013 on the assessee on the basis of letter written by ITO, Ward-3(1), Jaipur having jurisdiction over the case of company M/s Radha Govind Build Estate Pvt. Ltd. communicated the findings of Ld CIT(A)-I, Jaipur ‘s order dated 19-10-2013 that accounted profit shown in impounded documents is to be treated in respective years as mentioned in the impounded papers. The assessee requested copy of reasons recorded and copy of sanctions accorded u/s 151 which were supplied and also filed objections to notice u/s 148 which were rejected by Ld. A.O. The Ld. A.O. proceeded to reassess the assessee and completed the re-assessment by adding Rs. 3,42,08,965/- in the assessment order.
Order of CIT (A)
The assessee against said reassessment order filed appeal before CIT (A) and challenged the validity of notice u/s 147 issue to assessee and also challenged the addition of Rs. 3,42,08,965/-. The assessee in course of hearing of appeal filed written submissions which are reproduced in appeal order and also placed on (Paper Book Page 470-481). The CIT (A) in course of appeal considered the reply of appellant while deciding grounds of appeal raised by assessee. The Ld. CIT (A) discussed the entire facts and issue on pages 30-31 in para 3.3.2 of appeal order and decided the ground no. 1 to 3 and held as under:
“ I have considered assessee’s submission and carefully gone through assessment order. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon. I have carefully gone through the case records also.
In this regard, it is submitted that verifiable facts of case are that all the purchases of land and Sales of plots transactions are recorded in the books of account of Radha Govind Build Estates Pvt. Ltd. and Ld. AO had made no efforts to look into the real transactions recorded in books of accounts. It is also evident, the stated land purchased was agricultural land whereas the allegedsale is of residential plots, which can only be done after getting the conversion of land use involving approval of competent authorities and no such record/evidence/documents were referred to by the Ld. AO before arriving at the conclusion that the assessee has made undisclosed investment in acquisition of land and having income from unrecorded sale of such land. Further no effort has been made to verify the fact of ownership from the land revenue authorities as the sole allegation depends upon the ownership of land under reference alleged as purchased and sold by assessee company. Further, the amounts reflecting as profit in the impounded paper No.4 was merely an amount which was projected as profit on a future sale but that could be possible only if the land was purchased and subsequently sold. The verifiable facts are that all the purposes of land and sales of plots transactions are recorded in the books of account of M/s. Radha Govind Build Estates Pvt. Ltd. but no efforts was made during the assessment proceedings to look into the real transactions recorded in books of accounts. The real sale transaction will always be with reference to identifiable plots. Further, the impounded papers found during the course of survey operation relates projections and estimates made prior to the incorporation of company or at times in course of business or relates to transaction recorded in regular books of accounts of company duly audited and audited accounts were filed along with yearwise return(s) of income by assessee company.
Further, I have also taken a note of appellate order passed by Ld. CIT(A)-I, Jaipur wherein on the basis of same set of impugned impounded documents, appeals in case of M/s. Radha Govind Build Estate Pvt.Ltd. for A.Y. 2007-08, 2008-09 and 2010-11 have been partly allowed, wherein it has been held that additions will have to be made, sustained/enhanced in the hands of assessee company M/s. Radha Govind Build Estate Pvt.Ltd. only, accordingly, no addition is required to be made in the hands of directors namely Shri Laxmi Ram Khandelwal or in the hands of Shri Ramesh Chand Dangayach.
In view of facts and circumstances mentioned above and respectfully following the decision of ld CIT(A)-1, Jaipur in case of M/s. Radha Govind Build Estate Pvt.Ltd. (duly considering impugned Impounded documents), no additions on account of investment in land and profit arising out of it,can be made in the hands of assessee Shri Laxmi Ram Khandelwal when the same has already been considered in the hands of assessee company M/s. Radha Govind Build Estate Pvt. Ltd. Accordingly additions made of Rs. 89,35,941/- on account of share in profit from land transaction and Rs. 2,52,73,024/- on account of share in real estate projects are hereby deleted.
Therefore, in view of relief given in ground no.3, proceedings initiated u/s 147 of the Act becomes academic in nature, hence not adjudicated.
Thus appeal of assessee was allowed and against which the present appeal is filed by department .
Submission of Assessee
The assessee reiterates his submission made before CIT (A) and relies on order of CIT (A). The assessee, however makes his submission on the grounds raised by department.
Ground No. (1) – Whether on the facts and in the circumstances of the case the Ld. CIT (A) – 4, Jaipur was right in deleting the addition of Rs2,53,73,027/- on account of investment in real estate.
(i) The said addition on account of alleged investment in land(s) is made only on the basis of nottings on the seized paper No.4. As submitted in above paras that the nottings on the papers were only a projected/estimated investments in purchase of land for Private Limited company M/s.Radha Govind Build Estate Pvt.Ltd. It is a known fact that in respect of any transaction in land, there are bound to exist certain documents and other evidences which corroborate the execution of such transaction. For example – Registered Sale deeds, Purchase deeds, relevant entries in the bank statement showing payments towards purchase of land and receipt consequent to sale of land, the entries in revenue records, names of sellers from whom purchases were made and names of buyers to whom sales were made and many other things. Further as is evident, the land stated purchased was agricultural land and whereas the alleged sale is of residential plots, which can only be done after getting the conversion of land use involving approval of competent authorities and no such record/evidence/documents were referred to by the Ld. A.O. before arriving at the conclusion that the assessee has made undisclosed investment in acquisition of land and having income from unrecorded sale of such land.
As in appellant case there is no such documentary evidence and from other facts and circumstances of the case it is fully established that the said land purchase transactions do not pertain to the appellant, but pertain to the private limited company. The facts and submissions are supported from the documentary submitted in para 3 supra
(ii) In the case of Private Limited company addition has been made on account of the said notings. For sake of convenience relevant paras of the assessment orders are reproduced hereinbelow:-
A.Y.2007-08:- Order dated 13.03.2015 passed u/s 147/143(3) by the ITO, Ward 3(5), Jaipur.
The assessee company for ready reference and sake of convenience again reproduces the nottings on the seized paper No.10 Annexure ‘A’ herein below:-
| S.No | Name | Land area | Rate | Amount | Payment received |
| 1 | Anshuman Dhadda | 4000 | 1075 | 4300000 | 1715000 |
| 2 | Brij Behari
Agarwal |
6400 | 1000 | 6400000 | 5260000 |
| 3 | Vinod Agarwal | 4400 | 1075 | 4730000 | 2420000 |
| 4 | Hari ji | 1600 | 1300 | 2080000 | 300000 |
| 5 | Mukesh | 1600 | 1075 | 1720000 | 450000 |
| Sharma | |||||
| 6 | Pawan ji | 6200 | 1075 | 6665000 | 3654500 |
| 7 | Sonu ji | 4400 | 1300 | 5720000 | 907500 |
| 8 | Suresh ji | 4400 | 1300 | 5720000 | 0 |
| 9 | Sunil ji | 4000 | 1000 | 4000000 | 0 |
| Total | 37000 | 41335000 | 14707000 |
As per above submissions and nottings on the paper it is apparent and verifiable that upto 21.11.2006 out of sale consideration of Rs.4,13,35,000/-only a sum of Rs.1,47,07,000/- were received in advance out of which Rs.1,17,44,500/- were received in the F.Y(s) 2004-05 Rs.23,00,000/-, 2005-06 Rs.78,94,500/- and 2006-07 Rs.15,50,000/-.
Thus in F.Y. 2006-07 relevant to A.Y.2007-08 i.e. the year under assessment only (Rs.1,47,07,000 – 1,17,44,500) = Rs.29,62,500/- were received in cash and accordingly the income @ 25% should be worked out on the said amount i.e. Rs.29,62,500/- and not on Rs.4,13,35,000/- as proposed in your above said letter. In this connection it is also submitted that the amount received by cheques are only advances and the sales thereof are recorded in books in the subsequent financial years in which full payment was received.
Sd/-
ITO, Ward 3(5), Jaipur
A.Y. 2008-09:- Order dated 08.03.2016 passed by ITO, Ward 3(5), Jaipur.
“The assessee had filed its return of income on 30.09.2008 declaring total income at Rs. NIL. The case processed u/s 143(1). A survey u/s 133A of the I.T.Act, 1961 was conducted at the business premises of M/s.Radha Govind Build Estate Pvt.Ltd on 18.11.2009. During the course of survey proceedings, certain incrementing documents as per Annexure A were impounded containing page No.1 to 75. On perusal of impounded paper/documents, it was noticed that the directors of the assessee company, have sold land and received payment as follows:-
| S.No | Name of director who have sold | Amount received |
Page No. of annexure |
| 1 | Shri Giriraj Agarwal | Rs.2,58,09,703 | Page 16 Annexure – A |
| 2 | Shri Giriraj Agarwal | Rs.4,23,10,000 | Page 21 Annexure – A |
| 3 | Shri Ramesh
Dangayach |
Rs.7,68,09,950 | Page 21 Annexure – A |
The net profit of Rs.3,62,32,413/- has been calculated by applying net profit rate @ 25% on these transactions as admitted by the director of the assessee company Shri Ramesh Dangayach in his statement recorded during the course of survey proceedings. Accordingly, the net profit is worked out to Rs.3,62,32,413/- on the sales of plot of Rs.14,49,29,653/-.
“The net profit of Rs.3,62,32,413/- has been calculated by applying net profit rate @ 25% on these transactions as admitted by the director of the assessee company Shri Ramesh Dangayach in his statement recorded during the course of survey proceedings as are considered in all the assessment orders passed earlier either in the assessee company or in the hands of the directors. Accordingly, the net profit is worked out to Rs.3,62,32,413/- on the sales of plot of Rs.14,92,29,653/- as well as on the basis of reasons recorded in the matter the income to the extent of Rs.3,62,32,413/- found escaped assessment within the meaning of section 147 of the I.T.Act, 1961. Therefore, it is added total income of the assessee company as undisclosed income of the year under consideration”.
Looking of the fact mentioned above, I have reason to believe that the income to the extent of these transactions as admitted by the director of the assessee company Shri Ramesh Dangayach in his statement recorded during the course of survey proceedings. Accordingly, the net profit is worked out to Rs.3,62,32,413/- on the sales of plot of Rs.14,49,29,653/-.
Sd/-
ITO, Ward 3(5), Jaipur
From the above said relevant paras of the assessment order for the A.Y.2007-08 and 2008-09 it is accepted by the department that the notings on page No.4 and other seized papers pertain to the Private Limited M/s.Radha Gobind Build Estate Pvt.Ltd. and not to the appellant. Copy of said assessment orders of the Private Limited company are enclosed in a paper book filed.
Ground No. (2) – Whether on the facts and in the circumstances of the case the Ld.
CIT (A) was right in deleting the addition of Rs.89,35,941/- on account of profit on real estate.
This addition has been made on account of alleged 35% share is the alleged profits of Rs. 2,55,31,259/- in a real estate projects. The appellant submits that as per facts stated in para no. 1 and 2 supra the nottings were only projections and rough calculations of a proposed project of the Pvt Ltd Co. M/s Radha Govind Build Estate Pvt Ltd and not of the assessee as an individual. Even the appellant was not a partner in the partnership firm M/s.Radha Govind Estate who’s assets and liabilities were taken over by the said private limited company. The facts are completely verifiable from the following documentary evidences enclosed with this letter.
(i) Copy of registered deeds/agreements of land purchases.
(ii) Copy of balance sheet(s) and profit & Loss account(s) of M/s.Radha Govind Build Estate Pvt.Ltd for the A.Y.2006-07, 2007-08, 2008-09, 2009-10, 2010-2011 and 2011-12.
(iii) Copy of partnership deed and bank certificate.
In view of the above facts and submissions it is requested that there was no profit or income of the assessee amounting to Rs. 2,25,31,259/- as assessed by the Ld. A.O. It is therefore requested that the impugned addition is wrong and bad in law may very kindly be deleted. On the basis of above documentary evidences the Ld. CIT(A) deleted the additions.
In view of the above facts and circumstances of the case the impugned addition of Rs 89,35,941 and 2,52,73,024 made in appellant’s case is/are wrong and bad and in fact is a duplicate addition in law should be deleted.”
9. The ld. AR in addition to the above written submission submitted that the disputed paper is related to the residential housing project. The page no 74 shows the various alternative of the project it self proves that the seized material is related the scheme to be announced by the company and on incorporation of the company the said purchase and sale is reflected in the books of the company Rada Govind Buildstate Private Limited. He further submitted that the ratio of the each partner was in fact is different then what is mentioned in the seized material, all these proves that the same was mere estimate of the project. He further linking page 69 & 74 reiterate that these are the project estimate. He further submitted that the part of the transaction already reflected in the company after incorporation.
10. In the rejoinder the ld. DR relied upon the findings of the assessing officer and also on the order of the ld. CIT(A) in the case of Rada Govind Buildstate Private Limited. In that case of company it was contended that the assessment framed by the ld. AO deserved to be quashed as the entire seized papers do not disclosed any purchase and sale in assessment year 2009-10. The ld. AO in computing the purchase and sales purely relied upon the statement of Shri Ramesh Dangayach disregarding the evidence on record. Based on these contentions the ld. CIT(A) in the case of Rada Govind Buildstate Private Limited held that;
“I have carefully perused the order of the AO and the submissions of the AR along with the assessment and survey records and the impounded papers. I do not entirely concur with the submissions of the AR as follows:
1. First of all I do not agree with the submission that these papers were dumb or rough papers or mere projections involving fictious figures. In ground no. I of appeal the AR himself has submitted affidavits as per the list found (Page 1 of impounded documents) of purchasers of land and has submitted that these were furnished during the course of assessment proceedings as well. Therefore, these papers are neither dumb nor irrelevant in the case of the appellant company as per the submission of the AR himself. Secondly, the papers were being maintained by the Director & were found in his possession and were produced by him before the survey team. The details of the entries were explained by him in detail which further reiterates the fact that these papers pertained to the transactions undertaken by the company in Mahalxmi Enclave.
2. On perusal of the papers it is seen that specific notings have been made. The details of notings in Annexure- B to this order and were admitted by Shri Ramesh Dangayach in response to question No. 10:
Similarly from question so. 11 it is seen that entries on page 6 can be correlated with entries on page 3. The question and answer as being quoted to show that the notings were correlated:
Page 4 of the impounded paper is being annexed to this order as Annexure B for reference as to show how specifically the details of sale of land and gross profit etc. were recorded and that these were no mere conjectures.
| Page 16 | Name | Amount |
| Smt. Anuradha Agarwal & others | Rs.32,75,000/- | |
| M/s BLD consultancy Services (P) Ltd. | Rs. 5,00,000/- | |
| 10 | M/s Joy Build Estate | Rs.6,50,000/- |
| 11 | Shri B.B. Agarwal | Rs.6,50,000/- |
| 12 | Shri Giriraj Agarwal Customer a/c | 79,82,703/- |
| Total | Rs. 1,30,57,703/- |
these papers cannot be called dumb or rough papers by any stretch of imagination. There are specific notings and these can be correlated from one page to the other and have been explained in detail by the director of the appellant company himself during the course of survey proceedings. Therefore, the facts of the case laws relied on the by the AR of the assessee are completely different from the facts of the ease of the assessee and so the Judicial pronouncements in these case laws are not applicable to the facts of the case of the assessee
4. Regarding the submission, that the AO ignored the documents filed during the course of assessment proceedings it has been mentioned above, that on perusal of the assessment records it was seen that the affidavits were notarized on 28/12/2011 and furnished to the office of the AO. The matter was getting barred by limitation on 31/12/2012. Thus it was the AO who was denied an opportunity of determining the true facts of the case.
5. Regarding the stock tally of land purchased and sold furnished during the course of appellant proceedings it is seen that no books of accounts of the company were found during the course of survey nor were they produced subsequently. The director of the company stated that they were with his accountant but when the accountant Shri Ram Prasad Parikh was contacted on phone he denied having any books of accounts with him. On being confronted with this fact the director Shri Ramesh Dangayach finally admitted that all the papers relating to the transactions of purchase and sale of land in Neemera by M/s Radha Govind Build Estate Pvt. Ltd. were at his residence. Subsequently also, two opportunities were given to him to produce the books of accounts on 19/11/2009 and 27/11/2009 but no books of accounts were produced. Considering the above facts it is held that the company was gut maintaining any books of accounts. And therefore the details regarding the stock tally sad purchased and sold furnished is not verifiable. Instead a stock tally is required to be made as per the notings on these papers by the AO in the concerned assessment year.
6. Regarding the submission that no unexplained investment was made in the purchase of land the AR has merely reiterated that these papers were rough and the matter has been dealt with above. It has been submitted that land was purchased in earlier A.Y. and was duly recorded in regular books of accounts. It is seen that the books of accounts were not found nor produced during the course of survey proceedings or subsequently in-spite of repeated opportunity. Therefore, books of accounts prepared in earlier years cannot be relied upon in case they have not taken cognizance the entries made in these papers.
As for the fact that the Registration Authorities have accepted the disclosed amount by the assessee for purchase of land it is observed that since they did not have access to these papers they took the prevalent DLC rates for registration as is done normally. However, it is also an established practice to pay un-accounted cash. In the case of the assessee this evidence was found by the Department and brought on record. The most significant evidence is page 63 (Annexure-C to this order) which is an affidavit by Bhura and Hanuman sons of Shri Nathu & witnessed by 2 persons stating that they sold the land to the appellant company through the Director Mr. Ramesh Dangayach for Rs.15,90,000/- per bigha.
Regarding the submission at the statement recorded w/e 133A is not evidence and that the retraction of the assessee is justified I do not concur with die submission. It is usual practice to claim that die assessee was frightened or under stress at the time of the recording the statements. In fact, on perusal of the statements it is seen that from the very beginning he was trying to mislead the personnel of the department by stating that the books of accounts of the company were with his accountant. When the accountant was contacted on phone he completely denied having the books of accounts of the company. When confronted with this information Mr. Dangayach finally brought all the papers pertaining to the land transaction of this company from his residence. Similarly during the course of assessment proceedings he refused to take the notices and delayed filing submissions by one and a half months and thus tried to obstruct the course of justice in determining the correct income.
This course of action hardly indicates a person operating under fright or stress. Given the specific evidence found/brought by him by way of papers and his detailed explanation of the notings therein it becomes very clear that unaccounted transaction of purchase and sale of land had been undertaken by the company in the past several years and a record of this had been kept by him in his personal custody. Therefore, the statements of the director made on the basis of the papers is held to be valid evidence in so far as his explanation regarding these transaction is considered. However, since he did not have knowledge of the LT. law the surrender was made in one A.Y. only, rather than the in respective A.Ys. in which the transactions took place.
On perusal of all the papers it was seen that only page 56 has the date 5/02/2009 mentioned on it and seems to be an account of Shri Ramesh Dangayach regarding payment of car loans, TDS certificates etc.
This does not seem to have any financial implications as far as the income of the appellant company is concerned. A chart has been prepared regarding the dates of the pages impounded and the A. Ys. to which they pertain. The AO may consider taking necessary action in the respective A.Ys. as per annexure-D to this order after due verification of all the facts on record and evidence filed by the AR in view of the above observations.
Considering that the payments for purchase of land were not made in this year as per the evidence by way of papers impounded during this A.Y. nor were any papers showing receipts during A.Y. 2009-10 on sale of these plots found during the course of survey the addition of Rs.3,55,31,259/- made in this A.Y. is deleted.”
6. As a result, appeal is partly allowed.”
11. Based on the above findings the ld. DR submitted that there was specific finding of the ld. CIT(A) that the papers seized in this case not dump documents or rough papers or mere projections involving fictious figures. The papers were being maintained and were found in the possession of the director and were produced before the survey team. The details of the entry were explained by him in detail which further reiterates the fact that these papers pertained to the transactions undertaken. The ld. CIT(A) further observed that in the papers specific noting have been made and the same were confronted in question no. 10 & 11 of the statement recorded. The ld. CIT(A) has specifically attached that papers as Annexure – B to his order and held that there is specific reference as to how specifically the details of the sale of land gross profit were recorded. Based on very detailed finding he has held that these papers cannot be called dumb or rough papers by any stretch of imagination. There are specific noting and these can be correlated from one page to the other have been explained in detail by the director of the company. The ld. CIT(A) further observed regarding the stock tally of land purchased and sold furnished during the appellant proceeding it is seen that no books of accounts of the company were found during the course of the survey nor were they produced subsequently. Thus, here the reasoned finding of the ld. CIT(A) is that the there is not recording of these transaction in the books of the company and contrary to this in this case the ld. CIT(A) in para 3.3.2 given a contrary finding and the same is also reiterated here in below;
“3.3.2 I have duly considered assessee’s submission and carefully gone through assessment order. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon. I have carefully gone through the case records also.
In this regard, it is submitted that verifiable facts of case are that all the purchases of land and sales of plots transactions are recorded in the books of account of Radha Govind Build Estates P. Ltd. and Ld. A.O. had made no efforts to look into the real transactions recorded in books of accounts. It is also evident, the stated land purchased was agricultural land whereas the alleged sale is of residential plots, which can only be done after getting the conversion of land use involving approval of competent authorities and no such record/ evidence/ documents were referred to by the Ld. A.O. before arriving at the conclusion that the assessee has made undisclosed investment in acquisition of land and having income from unrecorded sale of such land., Further no effort has been made to verify the fact of ownership from the land revenue authorities as the sole allegation depends upon the ownership of land under reference alleged as purchased and sold by assessee company. Further, the amounts reflecting as profit in the impounded paper No.4 was merely an amount which was projected as profit on a future sale but that could be possible only if the land was purchased and subsequently sold. The verifiable facts are that all the purchases of land and sales of plots transactions are recorded in the books of account of M/s Radha Govind Build Estates P. Ltd. but no efforts was made during the assessment proceedings to look into the real transactions recorded in books of accounts. The real sale transaction will always be with reference to identifiable plots. Further, the impounded papers found during the course of survey operation relates projections and estimates made prior to incorporation of company or at times in course of business or relates to transaction recorded in regular books of accounts of company duly audited and audited accounts were filed along with year wise return(s) of income by assessee company.
12. The ld. DR strongly opposed the above finding where in the ld. CIT(A) has recorded opposite finding that these papers are dumbed documents and part of the documents are recorded in the books which is exactly contradict finding given in the case of the company by the ld. CIT(A). Thus, this contradict findings is not permissible by the same rank of the officer and based on the first findings the case of the assessee was re-opened and the ld. CIT(A) has without consulting the ld. AO, calling for the remand report or recording a finding that the how the earlier finding of the ld. CIT(A) is incorrect the order passed by the ld. CIT(A) in the case of the assessee is contrary to the facts on records and findings recorded by the ld. CIT(A) in the case of the company. Based on the detailed finding he submitted that the matter may be set – a side in the interest of justice.
13. We have considered the rival contention and perused the orders of the lower authorities and the material available on record, arguments advanced by both the parties and also gone through the judicial decision relied upon by both the parties. We have also gone through the material relied upon and seized / impounded. Based on the set of facts the limited issue before us that whether the finding recording by the ld. CIT(A) in this case is justified based on the set of facts already analyzed and accepted considering the arguments and evidences considered in the case of M/s. Radha Govind Buildstate Private Limited. The answer to this question is that the finding given by the ld. CIT(A) in this case is completely contradictory and that too is given without allowing the assessing officer to give the opportunity to counter his arguments and the ld. CIT(A) has given completely contrary finding that has been recorded by the ld. CIT(A) in the case of M/s. Radha Govind Buildstate Private Limited. In the case of company M/s. Radha Govind Buildstate Private Limited the ld. CIT(A) hold a view that these papers cannot be called dumb or rough papers by any stretch of imagination. There are specific noting and these can be correlated from one page to the other have been explained in detail by the director of the company. The ld. CIT(A) further observed regarding the stock tally of land purchased and sold furnished during the appellant proceeding it is seen that no books of accounts of the company were found during the course of the survey nor were they produced subsequently. Whereas in this case the ld. CIT(A) has recorded completely opposite finding that the impounded papers found during the course of survey operation relates projections and estimates made prior to incorporation of company or at times in course of business or relates to transaction recorded in regular books of accounts of company duly audited and audited accounts were filed along with year wise return(s) of income by assessee company.
14. Based on the above facts and arguments advanced by the ld. DR we are of the considered view that on the same of the set of evidence the ld. CIT(A) recorded a complete different findings subsequently which is contrary to the facts, evidences and contentions raised earlier. Not only that in this case the ld. CIT(A) order is not speaking and reasoned order but a cryptic against the fact already on record and the same is against the principles of the natural justice as he has given his finding without giving the opportunity to the ld. AO to ascertain the correct fact and the same is not in accordance with the one view taken in the case of the company and therefore, we are of the considered view that the order of the ld. CIT(A) in this case is not sustainable. At the same time we are of the view that there require verification of the all the partners / director of the company in their individual books vis a vis the transactions recorded in the case of the company after incorporation is the same transactions or the other out of the books transactions all these require in depth verification in this case and since the same is not done by the ld. CIT(A) in this case the matter is restored back in the interest of justice to the file of the ld. CIT(A) to pass a reasoned order after giving sufficient opportunity to the parties in accordance with the law.
15. In terms of this observation the appeal of the revenue in ITA No. 646-JP-2022 is allowed for statistical purpose.
16. The fact of the case in ITA No. 644-JP-2017 & 1220/JP/2019 are similar to the case in ITA No. 646-JP-2022 and we have heard both the parties and persuaded the materials available on record. The bench has noticed that the issues raised by the assessee in this appeal No. 644-JP-2017 & 1220/JP/2019 are equally similar on set of facts and grounds. Therefore, it is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in ITA No. ITA No. 646-JP-2017 for the Assessment Year 2006-07 shall apply mutatis mutandis in the case of Sh. Ramesh Dangayach and Sh. Giriraj Agarwal in ITA No. 644-JP-2017 & 1220/JP/2019 for the Assessment Year 2006-07.
In terms of this observation appeals filed by the revenue in ITA No. 646/JP/2017 ITA No. 644/JPR/2017 & 1220/JP/2019 are allowed for statistical purpose.
Order pronounced in the open Court on 14/11/2022.
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