Income Tax Appellate Tribunal - Delhi
Home Developers (P) Ltd, New Delhi vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'C
'C' : NEW DELHI
BEFORE SHRI G.D.AGRAWAL,
G.D.AGRAWAL, VICE PRESIDENT AND
SHRI CHANDRA MOHAN GARG,
GARG, JUDICIAL MEMBER
ITA Nos
Nos.2954/Del/2008, 3101/Del/2008 & 2955/Del/2008
Assessment Years
Years : 2004-
2004-05, 2005-
2005-06 & 2006-
2006-07
M/s Home Developers Vs. Deputy Commissioner of
(P) Ltd., Income Tax,
D-22, 2nd Floor, Central Circle-
Circle-21,
Defence Colony, New Delhi.
New Delhi - 110 024.
PAN : AAACH8444A.
(Appellant) (Respondent)
ITA Nos
Nos.4902/Del/2009, 4903/Del/2009, 4904/Del/2009,
4904/Del/2009, 4905/Del/2009,
4906/Del/2009 & 4907/Del/2009
Assessment Years
Years : 2004-
2004-05, 2004-
2004-05, 2005-
2005-06, 2005-
2005-06,
2006-
2006-07 & 2006-
2006-07
M/s Home Developers Vs. Additional Commissioner
Commissioner of
(P) Ltd., Income Tax,
D-22, 2nd Floor, Central Range-
Range-2,
Defence Colony, New Delhi.
New Delhi - 110 024.
PAN : AAACH8444A.
(Appellant) (Respondent)
ITA Nos
Nos.3312/Del/2008, 3577/Del/2008 & 3287/Del/2008
Assessment Years
Years : 2004-
2004-05, 2005-
2005-06 & 2006-
2006-07
Deputy Commissioner of Vs. M/s Home Developers (P) Ltd.,
Income Tax, D-22, 2nd Floor,
Central Circle-
Circle-21, Defence Colony,
New Delhi. New Delhi - 110 024.
PAN : AAACH8444A.
(Appellant) (Respondent)
2 ITA No.2954/Del/2008 &
16 others
ITA Nos
Nos.59/Del/2010, 60/Del/2010, 61/Del/2010, 62/Del/2010 &
63/Del/2010
Assessment Years
Years : 2004-
2004-05, 2005-
2005-06, 2006-
2006-07, 2004-
2004-05 & 2006-
2006-07
Assistant Commissioner of Vs. M/s Home Developers (P) Ltd.,
Income Tax, D-22, 2nd Floor,
Central Circle-
Circle-21, Defence Colony,
Room No.344, ARA Centre, New Delhi - 110 024.
E-2, Jhandewalan Extn., PAN : AAACH8444A.
New Delhi - 110 055.
(Appellant) (Respondent)
Assessee by : Shri Salil Agarwal, Advocate,
Shri Gautam Jain and
Shri Shailesh Gupta, CAs.
Revenue by : Shri R.I.S.Gill, CIT-DR.
ORDER
PER BENCH :
ITA Nos.2954/Del/2008, 3101/Del/2008 & 2955/Del/2008 are theassessee's appeals against the order of learned CIT(A)-II, dated 4.8.2008, 12.9.2008 and 4.8.2008 respectively while ITA Nos.3312/Del/2008, 3577/Del/2008 & 3287/Del/2008 are the Revenue's appeals for AY 2004-05, 2005-06 & 2006-07.
2. ITA Nos.59/Del/2010, 60/Del/2010 & 61/Del/2010 are the appeals by the Revenue for AY 2004-05, 2005-06 & 2006-07 against the reduction in the penalty levied under Section 271D while ITA Nos.4902/Del/2009, 4904/Del/2009 & 4906/Del/2009 are the assessee's appeals against the sustenance of penalty levied under Section 271D.
3. ITA Nos.62/Del/2010 & 63/Del/2010 are the appeals filed by the Revenue for AY 2004-05 & 2006-07 against the reduction in the penalty levied under Section 271E while ITA Nos.4903/Del/2009, 4905/Del/2009 & 4907/Del/2009 are the appeals by the assessee 3 ITA No.2954/Del/2008 & 16 others against the sustenance of penalty levied under Section 271E for AY 2004-05, 2005-06 & 2006-07 respectively.
4. Since common issues are involved in all these appeals, they are being disposed of by this single consolidated order for the sake of convenience.
5. The facts of the case are that there was search and seizure operation at the business premises of the assessee and other group concerns. Simultaneously, the search also took place at the residence of the directors/partners of the assessee and the group concerns. During the course of search at the premises of Shri Yogesh Gupta, certain documents were found and seized. His statement was also recorded on 31st May, 2006 in which he surrendered the sum of `13 crores as under:-
(i) In his own name : `2 crores
(ii) Home Developers (P) Ltd. : `2 crores
(iii) Realtech Project (P) Ltd.
Realtech Construction (P) Ltd. : `9 crores
6. In his statement, Shri Yogesh Gupta had stated that these noting of the paper were unaccounted transactions. The Revenue was fully satisfied with the surrender and closed their investigation. However, during the assessment proceedings, the Assessing Officer held that the noting on the papers found and seized at the time of search was in respect of loan taken by the assessee. He presumed that such loan is repaid by the assessee alongwith interest. No addition was made by the Assessing Officer for the alleged loan claimed to have been taken by the assessee but, he made the addition for alleged repayment of loans alongwith interest for AY 2004-05 to 2006-07 as under:-
4 ITA No.2954/Del/2008 &16 others Assessment Year Addition Made 2004-05 `4,78,00,000/-
2005-06 `1,98,45,000/-
2006-07 `9,82,62,432/-
7. On appeal, learned CIT(A) deleted the addition in respect of the repayment of principal amount of loan but he partly sustained the addition in respect of alleged repayment of interest. The year-wise position of the addition deleted and sustained by the learned CIT(A) is as under:-
AY Addition made by Deleted by CIT(A) Sustained by CIT(A) the AO 2004-05 4,78,00,000/- 4,49,65,000/- 28,35,000/- 2005-06 1,98,45,000/- 1,85,08,500/- 13,36,500/- 2006-07 9,82,55,432/- 9,08,85,750/- 73,69,682/-
8. The Revenue is in appeal in respect of the deletion of addition by the learned CIT(A) vide appeal in ITA Nos.3312/Del/2008, 3577/Del/2008 & 3287/Del/2008. The assessee is in appeal in respect of the addition sustained in ITA Nos.2954/Del/2008, 3101/Del/2008 & 2955/Del/2008.
9. The Assessing Officer also levied penalty for acceptance of loan in cash under Section 271D of the Income-tax Act, 1961 as under:-
Assessment Year Penalty Levied
2004-05 `3,84,60,000/-
2005-06 `2,25,50,000/-
2006-07 `9,78,63,940/-
5 ITA No.2954/Del/2008 &
16 others
10. On appeal, learned CIT(A) partly sustained the penalty and the year-wise position is as under:-
AY Penalty levied Relief by CIT(A) Penalty sustained 2004-05 3,84,60,000/- 3,23,60,000/- 61,00,000/-
2005-06 2,25,50,000/- 2,25,50,000/- -- 2006-07 9,78,63,940/- 9,53,63,940/- 25,00,000/-
11. The Revenue, aggrieved by the deletion of penalty, is in appeal before us vide ITA Nos.59/Del/2010, 60/Del/2010 & 61/Del/2010.
12. The Assessing Officer also levied penalty under Section 271E for repayment of loan in cash which is partly sustained by the learned CIT(A). The year-wise break up is as under:-
AY Penalty levied Relief by CIT(A) Penalty sustained 2004-05 1,36,69,400/- 68,19,000/- 68,50,000/- 2005-06 8,80,000/- Enhanced by 11,33,500/-
2,53,500/-
2006-07 8,46,33,100/- 8,36,33,100/- 10,00,000/-
13. The Revenue, aggrieved with the deletion of penalty, is in appeal vide ITA Nos.62/Del/2010 & 63/Del/2010 for AY 2004-05 & 2006-07 while assessee, aggrieved with penalty sustained, is in appeal before us vide ITA Nos.4903/Del/2009, 4905/Del/2009 & 4907/Del/2009 for AY 2004-05, 2005-06 & 2006-07.
14. Since in all these appeals, the issues are interrelated, they are heard together.
15. At the time of hearing before us, it is submitted by the learned counsel for the assessee that during the course of search, certain loose papers were found from the residence of Shri Yogesh Gupta and not 6 ITA No.2954/Del/2008 & 16 others the business premises of the assessee which is a private limited company. In pursuance to the search, the statement of Shri Yogesh Gupta was recorded on 31st May, 2006 in which he admitted that the loose papers are in his handwriting and he also explained that the loose papers contain details of various unaccounted transactions as well as certain unaccounted investments of the group concerns. He also surrendered the sum of `13 crores partly in his hands and partly in the hands of M/s Home Developers Pvt.Ltd., M/s Realtech Project (P) Ltd. and Realtech Construction (P) Ltd. Ultimately, when the returns were filed, the group concerns had offered the income of `15 crores as under:-
(i) Shri Yogesh Gupta : `2 crores
(ii) Home Developers (P) Ltd. : `2 crores
(iii) Rajeev Behl & his family members : `2 crores
(iv) Realtech Project (P) Ltd.
Realtech Construction (P) Ltd. : `9 crores
Total : `15 crores
16. The learned counsel submitted that in the loose paper, the name of the assessee is not there. Neither from the noting on the loose paper, it can be said that it was in respect of borrowing of money by the assessee. Moreover, the inference by the Assessing Officer that there was repayment of loan during the year under consideration is without any basis. He referred to page 43 on the basis of which addition of `3,88,00,000/- was made and pointed out that from the above page, it would be evident that there is only mention of name of Paliwal and some amounts on various dates. The total of those amounts at left hand side was `2,40,000/-. The Assessing Officer further presumed it to be `2,40,000/- and then again presumed that it is a borrowing in cash which is repaid during the year under 7 ITA No.2954/Del/2008 & 16 others consideration. He also presumed that interest thereon is paid at the rate of 20% i.e. amounting to `48 lakhs. Thus, the total addition he worked out is `2,88,00,000/- but when actual addition is made, the addition made was `3,88,00,000/-. This itself shows that the entire addition is based upon purely presumption. No corroboration of the above paper has been made either from Mr.Paliwal or anybody else.
The assessee and the group company have already surrendered the substantial sum of `15 crores as the income generated from the unaccounted transaction which has been accepted by the Revenue and further addition has been made based upon purely presumptions. That all other papers are also similar and for the sake of brevity, he is not referring to each and every individual paper. However, all the papers are in the paper book. He further submitted that similar issue was considered by the ITAT Delhi Bench and also Hon'ble Jurisdictional High Court in the case of assessee itself. That the Assessing Officer, considering same and similar papers, levied the penalty under Section 271D for AY 2001-02 to 2006-07. The total penalty worked out was `16,48,98,940/- which was bifurcated in six assessment years as under:-
Assessment Year Year Amount 2001-02 `5,00,000/-
2002-03 `48,25,000/-
2003-04 `7,00,000/-
2004-05 `3,84,60,000/-
2005-06 `2,25,50,000/-
2006-07 `9,78,63,940/-
Total : `16,48,98,940/-
That the appeals for AY 2001-02, 2002-03 & 2003-04 came up before the ITAT Delhi Bench vide ITA Nos.4495, 4496 & 4497/Del/2009 in 8 ITA No.2954/Del/2008 & 16 others which the ITAT held that from these papers, the acceptance of loan in cash by the assessee is not proved. Accordingly, the ITAT upheld the order of the CIT(A) wherein the penalty levied under Section 271D was cancelled. The Revenue filed appeal before the Hon'ble Jurisdictional High Court which also upheld the order of the ITAT and held that it is not established that the respondent assessee had taken loan/deposit in cash. He stated that the facts of the year under consideration are identical. That in those years also, same/similar papers were considered, same statement of Shri Yogesh Gupta was considered and same consolidated order passed by the Assessing Officer was considered. Therefore, the issue is squarely covered in favour of the assessee by the above decision of the Tribunal as well as Hon'ble Jurisdictional High Court. He also relied upon the following decisions:-
(i) CIT Vs. Sahara India Corporation Ltd. - 296 ITR 285 (Delhi).
(ii) CIT Vs. Samir Diamonds Exports Ltd. - 245 ITR 548 (Bombay).
(iii) CIT Vs. Standard Brands Ltd. - 285 ITR 295 (Delhi).
(iv) CIT Vs. R.P.Singh and Co.Pvt.Ltd. - 340 ITR 217 (Delhi).
17. The learned DR, on the other hand, relied upon the order of the Assessing Officer. He stated that during the course of search, certain incriminating documents were found and seized. The assessee as well as its group concern had disclosed substantial undisclosed income on the said loose papers. Thus, it is proved beyond doubt that the loose papers belonged to the assessee and its group concern. The Assessing Officer has only drawn necessary inference on the basis of those loose papers and has made the addition in accordance with law. When the assessee borrowed the substantial amount in cash and repaid substantial amount in cash, the levy of penalty under Section 271D/271E was in accordance with law and learned CIT(A) was not justified in allowing relief to the assessee. He, therefore, submitted 9 ITA No.2954/Del/2008 & 16 others that the order of learned CIT(A) should be reversed and that of the Assessing Officer should be sustained.
18. We have carefully considered the arguments of both the sides and perused the material placed before us. First, we shall examine the assessee's contention that this issue is concluded by the decision of ITAT and Hon'ble Jurisdictional High Court in assessee's own case, of course in respect of penalty under Section 271D. We find that the Assessing Officer, vide consolidated order dated 30th September, 2008 for AY 2001-02 to 2006-07, levied penalty under Section 271D amounting to `16,48,98,940/-. The relevant portion of the penalty order reads as under:-
"06. From the aforesaid discussion, it can be seen that the defaults have taken place within the meanings of section 269SS read with Section 271D and section 269T read with section 271E of the Income Tax Act. There is no doubt that the documents referred to above reflect mainly the unaccounted receipt of loan/deposit and their repayment along with interest. Various documents seized from the premises of the assessee company or of its Directors show huge receipt and payment of cash loan/deposits. These have been analyzed and it is seen that the transactions in violation to the provisions of 269SS are as per below;
Default as committed u/s 269SS r.w. Sec. 271D SN Narration & Reference Amount of default 1 Cash loan/deposits of 1,48,50,000 received upto 17- 1,48,50,000 05-2004 as found referred in Annexure A-7/Page 42 relevant to AY 05-06 2 Loan/Deposit of Rs.2.40 cr. received from Paliwal in 2,05,00,000 AY 04-05 shown in Ann. A-7 Page 43 less 35 lacs recd by cheque in AY 04-05 10 ITA No.2954/Del/2008 & 16 others 3 Additional loan/deposit received on 18-05-04 as 10,00,000 referred in Annex. A-7 page 43 in AY 05-06 4 Cash loan/deposits received upto 31-03-2004 as 25,00,000 referred in Annexure A-7 page 43 in AY 04-05 5 Cash loan/deposit on which interest of 4.68 lacs paid 93,60,000 from 01-1-04 to 31-03-04 as referred in A-7 page 43 in AY 04-05 6 Cash loan/deposits (minus cheque amts) received 60,25,000 mentioned in A-12 Page 17 falling in AY 01-02; 02- 03; 03-04 & 06-07 [AY 03-04=7 lacs; AY 02-03-48.25 & AY 01-02=5 lacs] 7 Cash loan/deposits from Sameer Johrii (AY 06-07) as 3,55,00,000 referred in Ann.A-10 page 11 of 3.55 cr. In AY 06-07 8 Cash loan/deposits received as mentioned in A/c 5,63,63,940 upto 14-11-05 referred in Ann.A-11 page 22 back (also on page 23) AY 06-07 9 Cash loan/deposit from Ojhajee as on 04-08-2004 as 67,00,000 indicated in Ann. A-11 Page 17 in AY 05-06 10 Cash loan/deposits recd. as mentioned in Ann. A-12 60,00,000 Page 24 in AY 06-07 11 Further receipt of Cash loan/deposits of 61 lacs as 61,00,000 referred in Ann. A-11 Page 17 after receipt of 67 lacs on 04-08-2003 in AY 04-05 Total amounts of defaults committed 16,48,98,940 Assessment year wise defaults for which penalty is leviable is as under; Asstt.Year AY 01- AY 02- 03-04 04-05 05-06 06-07 Total 02 03 Penalty 500000 4825000 700000 38460000 22550000 97863940 16,48,98,940 amt.
07. After considering the facts and circumstances of the case, it is clear that the assessee has violated the provisions of section 269SS of the Act by accepting the loans/deposits otherwise by way of crossed cheque/draft as referred to above. Further, the assessee has failed to explain as to why the said transactions could not have 11 ITA No.2954/Del/2008 & 16 others been entered into by way of bank draft or crossed cheques. Accordingly, it is held that the assessee has committed the default without any reasonable cause u/s 271D of the Act and, therefore, penalty of Rs.16,48,98,940 i.e. equal to the amount received as mentioned above is hereby levied in years mentioned above."
19. It seems that the appeals against the above penalty order for AY 2001-02, 2002-03 & 2003-04 were decided early by the CIT(A) who cancelled the penalty. The Revenue filed appeal before the ITAT against the cancellation of penalty while the assessee was in cross- appeal on the technical issue of penalty being barred by limitation. The ITAT disposed of those appeals vide ITA Nos.4495, 4496 & 4497/Del/2009 in which the Revenue's appeals as well as assessee's appeals were dismissed. The relevant finding by the ITAT reads as under:-
"13. We have carefully considered the rival submissions in the light of the material placed before us. From the contents of the seized document, it cannot be said with certainty that the assessee being a company has contravened the provisions which stipulates that no person shall, after the 30 day of June, 1984, take or accept from any other person (hereinafter referred to as depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft, if the said amount in any case exceed `20,000 or more. The first condition to be fulfilled is that the acceptance by the person upon whom the penalty sought to be levied of loan or advance from any other person. The document itself does not indicate that the assessee itself has accepted from any other person any loan or deposit otherwise than by an account 12 ITA No.2954/Del/2008 & 16 others payee cheque. The name of the assessee is completely absent from the said document. It is not the case of the revenue that the said document was further corroborated with some material to indicate that the said amounts were paid to the assessee company in the form of loan or deposit. In the absence of any such material being brought on record simply on the basis of aforementioned document, it cannot be said that the assessee company has contravened the provisions of Section 269-SS so as to make it liable for penalty u/s 271D. Considering the entirety of the facts and circumstances of the case, we are of the opinion that there is no infirmity in the order of the CIT(A) vide which he has deleted the penalty on merits. We decline to interfere and, therefore, the departmental appeals are dismissed."
(emphasis by underlining provided by us)
20. The Revenue filed appeal against the order of the ITAT before Hon'ble Jurisdictional High Court. The Hon'ble Jurisdictional High Court, vide order dated 23rd May, 2012 in ITA Nos.301/2012, 304/2012 & 305/2012, dismissed the Revenue's appeals with the following finding:-
"5. Learned counsel for the Revenue has relied on the statement of Yogesh Gupta recorded on 31st May, 2006. in the said statement Yogesh Gupta had disclosed and surrendered an amount of Rs.13.05 crores as additional income in the financial year 2005-06. This included Rs.2 crores in his own hand and Rs.9.05 crores as income of Real Tech Projects Pvt.Ltd. Rs.2 crores was disclosed as undeclared income of Home Developers Pvt.Ltd. In the said statement in question Nos.11 and 12 Yogesh Gupta 13 ITA No.2954/Del/2008 & 16 others was asked to explain document A-12. Yogesh Gupta had stated that these were unaccounted transactions in cash. No question was put to state or furnish the details of the writer or recipient i.e. the details of the companies, which had received the said amounts. He was also not asked to specify or state whether the amount received was on account of advances for flats or loan. Revenue was fully satisfied by the surrender made and closed their investigation. Thus, in the present case, there is doubt, but it is not established that the respondent-assessee had taken loan/deposit in cash. There is suspicion but this alone without further verification and investigation cannot justify the finding that the respondent-assessee had taken loan/deposit in cash. The findings recorded by the tribunal are not perverse.
6. In view of the aforesaid factual position, we do not think that the order passed by the tribunal requires any interference in exercise of power under Section 260A of the Act. Accordingly, the appeal is dismissed.
7. At this stage, learned counsel for the appellant- Revenue submits that appeals of other years are pending before the tribunal. We express no opinion on other appeals, as the decision will depend on the facts of each case."
(emphasis by underlining provided by us)
21. From paragraph No.7 of the above decision of Hon'ble Jurisdictional High Court, it is clear that the Hon'ble High Court has clearly mentioned that they are not expressing any opinion on the 14 ITA No.2954/Del/2008 & 16 others appeal of other years which are pending before the Tribunal and the same will depend on the facts of each case.
22. Now, the question arises whether the facts in the appeals before us are different or similar.
23. It has been admitted by the parties before us that the facts of all the three years under appeal before us are similar. Therefore, for the sake of brevity, we shall discuss here the facts of AY 2004-05. The Assessing Officer, in the assessment order dated 31st December, 2007, recorded the following finding relating to loose papers:-
"Analysis of the seized material in regard to loan transactions & repayment Annexure A-7
1. One Annexure A-7 was seized from the residence of Shri Yogesh Gupta. This Register contains interalia details of various transactions in properties. About this Register, the assessee in his explanation has submitted that the same are rough workings and do not have any financial implications. Apart from the property transactions, this also contains loans/deposit transactions also. To refer, on page No.42 and 43 of it details of various loans/deposits received from one Mr. Paliwal and Mr. Gupta SDA are mentioned. The entries in this Register are very speaking and leave no doubt that they (e.g. on page 42 and 43) are the transactions of cash loans received and the interest paid. The loans have been received in FY 03-04 and afterwards. Very obviously when the assessee has received cash loans they also must have been repaid in cash only. As mentioned above, there is no claim of the 15 ITA No.2954/Del/2008 & 16 others assessee that by the disclosure amount (which admitted stand invested in the assets as mentioned) inter alia include repayment of loans also. Going by the fact that assessee notes the entries ignoring '00'/'000' (2/3 zeros) the transactions are in lacs/crores. Even if it is presumed that the profits as earned by the assessee forms part of the disclosure still very clearly the repayment of interest and cash loans/deposit is in addition to the aforesaid disclosure. Apart from taking action u/s 269SS/269T, the repayment of loan and interest is also required to be taxed additionally.
As per page 43 (pertaining to some Mr. Paliwal) loans received comes to 2,40,00,000/- (in AY 04-05) on various dates. It is held that these loans received, as also seen from the other column of the page, have been repaid in AY 04-05 itself. Further, the interest thereon as paid/payable comes to Rs.48 lacs (18 to 24% and here is averaged out to 20%). Total addition on account of this page would work out to Rs.2,88,00,000/- (2,40,00,000/- + 48 lacs). I am satisfied the assessee has furnishing/concealed particulars of his income. Penalty proceedings u/s 271(1)(c) is being initiated on this point separately.
(Addition 3,88,00,000/-)
2. Similar are the facts of Page No.16 to 18 (Annexure A-11) seized from the residence of Yogesh Gupta. These pages give details of loans/deposits and the interest paid/payable thereon to some Ojhaji & Sharmaji which comes to 75 lacs (8 lacs + 67 lacs) in AY 04-05. It is held that these loans received, have been repaid in AY 04-05 itself. Further, the interest thereon as paid/payable comes 16 ITA No.2954/Del/2008 & 16 others to Rs.15 lacs. Total addition on account of this page would work out to Rs.90 lacs (75 + 15). I am satisfied the assessee has furnishing/concealed particulars of his income. Penalty proceedings u/s 271(1)(c) is being initiated on this point separately."
24. From the above, it is evident that the papers were seized from Shri Yogesh Gupta and as per the Assessing Officer, these papers recorded the transactions of loan received by the assessee. Here, it would be relevant to consider the statement of Shri Yogesh Gupta from whom the papers were seized. The relevant portion of his statement reads as under:-
"Q.4 During the search & seizure operations carried out at your residence on 28/03/2006, you had made a voluntary disclosure of an additional income of Rs.13 Crores. Do you confirm the same?
Ans. - Yes, I confirm the above disclosure of Rs.13 Crores of additional income.
Q.5 Please give the assessee wise break up of the above mentioned disclosure.
Ans. I have made a disclosure of Rs.13 Crores the break up of which is as under:
1. In my own hands Rs.2 Crores (Two Crores)
2. M/s Home Developers Pvt.Ltd. Rs.2 Crores (Two Crores)
3. M/s Real Tech Projects & Construction Pvt.Ltd. Rs.9 Crores (Nine Crores) 17 ITA No.2954/Del/2008 & 16 others Q.6 Please also give the details regarding the sources of this unaccounted income of Rs.13 Crores and its utilisation.
Ans. The money have been generated by the group over a period of time out of unaccounted transactions of commission, sale, purchase, construction, finishing as well as financing of properties.
The amounts so generated have been utilized in acquisition of assets or introduction in business in the form of stock and cash. The details are as under:
(A) In my own hands
Sl.No. Utilisation of Unaccounted money Amount utilized(Rs.)
1 Advance against property to M/s Home 25,00,000/-
Developers Pvt.Ltd.
2 Advance against property no.E-6/13, Vasant 1,61,00,000/-
Vihar, New Delhi to M/s Kirti Realtors Pvt.Ltd. 3 Investment in proprietary unit "Innovation" 1,95,000/- 4 Stock in Home Developers Pvt.Ltd. 12,05,000/-
(purchased out of regular books of accounts in Cash) Total 2,00,00,000/-
(B) In the hands of M/s Home Developers Pvt.Ltd.
Sl.No. Utilisation of Unaccounted money Amount utilized(Rs.) 1 Payments made against purchase of property 1,54,00,000/-
no.A-9/33, Vasant Vihar, New Delhi 2 Payment made against purchase of property 37,80,000/-
no.2, Sukhdev Market, Kotla, Delhi.
3 Cash in hand (Imprest) 7,57,000/-
Total 1,99,37,000/-
(C) In the hands of M/s Real Tech Projects & Construction Pvt.Ltd.
18 ITA No.2954/Del/2008 &
16 others
Sl.No. Utilisation of Unaccounted money Amount utilized(Rs.)
1 Sale proceeds received in cash in connection 9,00,00,000/-
with the ongoing & future projects utilized in incurring various expenditure in cash relating to construction of the projects paid outside the regular books of accounts.
Q.7 I am showing the Annexure A-7 seized from your residence during the search & seizure operations carried u/s 132 on 28/03/2006. Please explain the contents of the same and in whose handwriting these have been written.
Ans. This annexure is in my own handwriting and it contains the details of same unaccounted transactions which are contained in Annexures A-1 to A-6 and have been fully covered under the disclosure made above. Specifically Page no.7 of this annexure contains details of Investment of Rs.37,80,000/- made in Property at Kotla which is not recorded in the books of accounts. The figure of "29,300" on this page represents the cost of plot and actually means Rs.29,30,000/- and similarly the figure of "8.5(C)" represents the cost of construction and means Rs.8,50,000/-. Therefore the total cash amount invested in this property is Rs.37,80,000/- which is being offered for taxation as an additional income.
Q. Please tell the source of this cash investment of Rs.37.80 lakhs.
Ans. The source of this investments is Cash receipts by M/s Home Developers Pvt.Ltd. through the business of 19 ITA No.2954/Del/2008 & 16 others sale/purchase of properties and are not accounted for in the regular books of accounts.
Q.8 I am showing the Annexures A-8 & A-9 seized from your residence during the search & seizure operations carried u/s 132 on 28/03/2006. Please explain the contents of the same.
Ans. These annexures contain various day to day miscellaneous notings regarding pending works etc. and have no financial implications.
Q.9 I am showing the Annexures A-10 & A-11 seized from your residence during the search & seizure operations carried u/s 132 on 28/03/2006. Please explain the contents of the same.
Ans. These annexures contain details of various accounted as well as unaccounted transactions which represent receipts in Cash from various persons and expenditure incurred in cash. However the same have been duly considered in making the above disclosure of Rs.13 Crores in my hands and the hands of my companies.
Q.10 I am showing the Annexure A-12 seized from your residence during the search & seizure operations carried u/s 132 on 28/03/2006. Please explain the contents of the same.
Ans. This annexure contains details of various accounted as well as unaccounted transactions which represent receipts in Cash from various persons and expenditure 20 ITA No.2954/Del/2008 & 16 others incurred in cash. Specifically pages no.7 to 9 represent the receipts and payments by the directors of M/s Real Tech Construction Pvt.Ltd. (Shri Yogesh Gupta, Shri Rajiv Behl and Shri Pankaj Dayal). All three of them are entitled to receive and spend money on behalf of the company. The pages no.7 to 9 represent the amounts received by them in Cash as well as through Cheques from various persons on account of booking of various units of several projects of the company.
Page no.6 of this annexure is the combined summary of the receipts as per pages 7 to 9. The total cash receipts as per these pages are Rs.7.25 Crores.
A disclosure of an additional income of Rs.7.25 Crores has been made on this account. The pages no.24 to 34 (ledger accounts) represent cash collection made by various agents and their utilization. However, these cash receipts are also reflected in the pages 6 to 9 of this annexure.
Q. Please tell how the above receipts of Rs.7.25 Crores have been utilized?
Ans. This amount has been utilized for incurring various expenditure relating to the construction of the projects being executed by the company paid outside the books of accounts.
Q.11 I am showing you the Annexure A-1 seized from the residence of Shri Jatinder Kumar Gupta at 1649, Sector 7E, Faridabad, Haryana during the course of search & seizure 21 ITA No.2954/Del/2008 & 16 others operations carried u/s 132 on 28/03/2006. Please explain the contains of the same.
Ans. This annexure contains various business correspondence, copies of cheques, bank statements and some bills etc. Q.12 I am showing you the Annexure A-2 seized from the residence of Shri Jatinder Kumar Gupta at 1649, Sector 7E, Faridabad, Haryana during the course of search & seizure operations carried u/s 132 on 28/03/2006. Please explain the contents of the same.
Ans. Page no.1 & 2 are receipts issued by Joyce Titus in respect of payments made by me for purchase of property no.F/5/2, Vasant Vihar, New Delhi. Out of this Rs.25 lakhs was paid in cash and the same is being surrendered i.e. offered for taxation.
Pages no.45 to 52 are agreement to sell regarding purchase of property no.E-6/13, Vasant Vihar, New Delhi by M/s Kirti Realtors Pvt.Ltd. A cash payment of Rs.31 lakhs was made by the company to the vendors. I would also like to state that although the agreement to sell is for Rs.3.61 crores, the sale deed of this property was executed for Rs.2 crores i.e. in the sale deed the property was undervalued by Rs.1.61 crores. Therefore an amount of Rs.1.61 crores is being offered for taxation as an additional income in my own hands, since I had made the cash payments of Rs.1.61 crores out of my personal income.
22 ITA No.2954/Del/2008 &16 others The pages no.77 to 84 of this annexure are receipts of payments made by M/s Home Developers Pvt.Ltd. to various vendors against purchase of property no.A-9/33, Vasant Vihar, New Delhi. As per these pages, cash payments of Rs.54 lakhs were made to the vendors. Therefore, an additional income of Rs.54 lakhs is being offered for taxation in the hands of M/s Home Developers Pvt.Ltd.
The other pages are various sale deeds in r/o several properties which have already been sold."
(emphasis by underlining provided by us)
25. From the above, it is evident that a detailed enquiry was made from Shri Yogesh Gupta in respect of various papers seized from him and in respect of not a single paper, he has stated that the noting on the paper is relating to borrowing by the assessee. In respect of each and every paper, he explained the nature of transaction and in most of the cases also explained the name of the group concern to which such paper belonged. In respect of only few papers i.e. page Nos.77 to 84 of the Annexure (see reply to question No.12), he mentioned that these papers belonged to M/s Home Developers (P) Ltd., i.e., the assessee. He stated that these papers are relating to purchase of property No.A-9/33, Vasant Vihar, New Delhi in respect of which cash payment of `54 lakhs was made and which was offered as additional income. The Hon'ble Jurisdictional High Court has also considered his statement while deciding the Revenue's appeal for AY 2001-02, 2002- 03 & 2003-04 and has recorded the similar finding that with regard to the loose papers, Shri Yogesh Gupta had stated that these were unaccounted transactions in cash. In his statement, he also surrendered the income of `13 crores in his name and in the name of 23 ITA No.2954/Del/2008 & 16 others the group concern. The Hon'ble Jurisdictional High Court had also noted that the Revenue was fully satisfied by the surrender made and closed their investigation. The above finding of the Hon'ble Jurisdictional High Court is squarely applicable to the year under appeal also because we find that in the year under appeal also, the Revenue has brought no other material on record to establish that as per the loose papers, any amount was borrowed by the assessee. They have not even examined the person whose name is claimed to have been mentioned on the loose papers. In the loose papers, no where it is mentioned that they belonged to the assessee i.e. M/s Home Developers (P) Ltd. which is a company. Admittedly, the loose papers were found from Shri Yogesh Gupta and not the assessee company. The undisclosed income represented by such loose papers had already been offered by Shri Yogesh Gupta and other group companies which has been accepted by the Revenue. Photocopy of the loose papers have also been produced by the assessee in his paper book. For the sake of brevity, we shall mention herein below only one loose paper i.e. page No.43 in which, according to the Revenue, there is an evidence of loan of `2,40,00,000/- taken by the assessee. We find that the Assessing Officer has considered the entries at the left hand side of the paper which is totaled to `2,40,000/-. On this loose paper, only one name Paliwal is written and there are dates and amounts without any narration. The total of amounts is `2,40,000/-. It is the inference of the Assessing Officer that the assessee is making the entries ignoring '00'/'000' (2/3 zeros). It seems that in `2,40,000/-, he increased '00' (2 zeros) and made it `2,40,00,000/-. As per the Assessing Officer, the entry is for receipt of loan, though in the loose paper there is no such narration except date and amount. The Assessing Officer further presumes that the assessee has repaid the loan alongwith the interest and he presumed the rate of interest to be 20%. He made the addition in respect of such alleged repayment of loan with interest. The learned CIT(A) has deleted the addition with 24 ITA No.2954/Del/2008 & 16 others regard to repayment of loan on the ground that since loan amount itself was available with the assessee out of which this repayment was made, he reduced the interest. Thus, the addition is partly sustained by him. However, after considering the entire facts and arguments of both the sides, we find that the entire addition is based upon the presumption of the Assessing Officer. On the loose papers, there is noting of dates and amounts without any narration. The total of such amount is `2,40,000/-. The first presumption by the Assessing Officer is that it is not `2,40,000/- but `2,40,00,000/-. The second presumption is that the noting is relating to loan taken by the assessee. The third presumption is that the loan was repaid during the accounting year relevant to the assessment year under consideration. The fourth presumption is that the repayment of the loan was alongwith interest at the rate of 20%. On these series of presumptions, he not only made huge additions running into crores of Rupees but also levied penalties under Sections 271D & 271E. His finding is neither based upon the noting on the loose papers nor any corroborative evidence brought on record during the course of assessment proceedings. On the other hand, material available on record is contrary, i.e., (i) the papers were found from Shri Yogesh Gupta and not the assessee, (ii) statement of Shri Yogesh Gupta was recorded in which he stated that these were unaccounted transactions,
(iii) he surrendered the income from such unaccounted transactions in his hands as well as in the hands of group concern, (iv) the income from unaccounted transactions as surrendered by Shri Yogesh Gupta and all the group concerns has been accepted by the Revenue. In view of these facts, if Revenue wanted to take the view that the noting on the loose papers is with regard to loan taken by the assessee, then the burden was upon the Revenue to establish so. However, the Assessing Officer did nothing except to make series of presumptions and then made the addition and levied the penalty on the basis of his presumptions. We find that similar situation was dealt with by the 25 ITA No.2954/Del/2008 & 16 others ITAT while considering the Revenue's appeal for penalty for AY 2001- 02, 2002-03 & 2003-04 and the ITAT has held that the document does not indicate that the assessee has accepted loan or deposit from any other person. The name of the assessee is completely absent from the said document. Identical is the situation in the years under appeal before us. None of the documents indicate that the assessee i.e. M/s Home Developers (P) Ltd. has taken any loan or deposit from any other person. The above finding of the ITAT has been upheld by the Hon'ble Jurisdictional High Court. The Hon'ble Jurisdictional High Court held that though there is a doubt but it is not established that the respondent assessee had taken loan/deposit in cash. Their Lordships further observed that there is suspicion but this alone without any further verification and investigation cannot justify the finding that the respondent-assessee had taken loan/deposit in cash. With these observations, their Lordships upheld the finding of the ITAT. In our opinion, the above observation of their Lordships of the Jurisdictional High Court in assessee's own case for AY 2000-01 to 2003-04 would be squarely applicable in the years under appeal also. In these years also, at the most, it can be the doubt of the Assessing Officer that unaccounted transactions are in the nature of the loan taken. However, the doubt or suspicion of the Assessing Officer is not enough to hold that the assessee had taken loan/deposit in cash. Moreover, in the years under appeal, the Assessing Officer made further presumptions that there was repayment of loan in cash though there is no such noting on the loose paper. In our opinion, the finding of the ITAT as well as Hon'ble Jurisdictional High Court in AY 2000-01 to 2003- 04 would be squarely applicable to the years under appeal. We further hold that when it is not established that the assessee had taken loan or deposit, the question of further presumption that such loan or deposit was repaid during the year under consideration was without any basis or material on record.
26 ITA No.2954/Del/2008 &16 others
26. In view of the above, we, respectfully following the decision of the ITAT and Hon'ble Jurisdictional High Court in assessee's own case for AY 2000-01 to 2003-04 (supra), hold that the addition made by the Assessing Officer for unexplained repayment of loan and also interest thereon cannot be sustained. Therefore, the order of learned CIT(A) to the extent he deleted the addition is upheld and the Revenue's appeals in ITA Nos.3312/Del/2008, 3577/Del/2008 & 3287/Del/2008 are dismissed. So far as the addition in respect of interest sustained by the learned CIT(A) is concerned, the same is reversed and the addition sustained by the learned CIT(A) in respect of interest is deleted. Accordingly, assessee's appeals in ITA Nos.2954/Del/2008, 3101/Del/2008 & 2955/Del/2008 are allowed.
27. The Assessing Officer has also levied penalty in respect of acceptance of loan/deposit in cash and also the repayment of loan/deposit in cash. As we have already held that there is no evidence of acceptance of loan or deposit in cash or repayment of loan or deposit in cash, therefore, the penalties levied under Section 271D and Section 271E are cancelled. The appeals of the Revenue against deletion of penalty are dismissed whereas the appeals of the assessee against the sustenance/enhancement of penalty are allowed.
28. In the result, all the appeals of the assessee are allowed whereas that of the Revenue are dismissed.
Decision pronounced in the open Court on 21st September, 2012.
Sd/- Sd/-
(CHANDRA MOHAN GARG)
GARG) (G.D.AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
Dated : 21.09.2012
VK.
27 ITA No.2954/Del/2008 &
16 others
Copy forwarded to: -
1. Assessee : M/s Home Developers (P) Ltd., D-22, 2nd Floor, Defence Colony, New Delhi - 110 024.
2. Revenue : Deputy Commissioner of Income Tax, Central Circle-
Circle-21, New Delhi and Additional Commissioner of Income Tax, Central Range-
Range-2, New Delhi.
3. CIT
4. CIT(A)
5. DR, ITAT Assistant Registrar