Income Tax Appellate Tribunal - Delhi
Dcit, Central Circle-28, New Delhi vs Psk Finance Solutions Pvt. Ltd., New ... on 15 May, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'H', NEW DELHI
Before Sh. Kul Bharat, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
ITA No. 663/Del/2021 : Asstt. Year : 2016-17
DCIT, Vs. PSK Finance Solutions Pvt. Ltd.,
Central Circle-28, DPT 801, Plot No. F-79-80, DLF Prime
New Delhi-110055 Tower, New Delhi-110020
(APPELLANT) (RESPONDENT)
PAN No. AAGCP6657D
Assessee by : Sh. Sanket Milind Joshi, CA
Revenue by : Sh. Subhash Chandra, CIT-DR
Date of Hearing: 06.03.2024 Date of Pronouncement: 15.05.2024
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the Re venue against the order of ld. CIT(A)-29, New Delhi dated 26.03.2021.
2. Following grounds have been raised by the Revenue:
"1. That on the fa cts and in the circumstances of the case, the Ld. CI T (A) has erred in law and on facts in de leting the addition o f Rs. 4,37,50,000/- , made by the AO, without appreciating the detaile d reasons given in the assessment order and without appreciating the fact that cash seized from the premise which belongs to Sh. Jai Shiv Saxena.
2. That on the facts and in the circumstances of the c ase, the Ld. CI T (A) has erred in law and on facts in de leting the additio n of Rs. 4,37,50,000/-, made u/s 69A by the AO, witho ut appreciating the fact Sh. Jai Shiv Saxena is constantly changing his statement just to circumve nt the fac ts of the case ."2 ITA No. 663/Del/2021
PSK Finance Solutions Pvt. Ltd.
Sl. No. 1 Excerpts from Page 2 to 10
Assessment Order
Sl No . 2 Subm ission of the Page 10 to 59
assessee before
the ld. CIT(A )
Sl. No.3 Observation of the Page 59 to 77
ld. CIT(A)
Sl. No. 4 Conclusion Page 77 to 80
3. Assessment Order giving the complete b ackground of the case and the additions made is as under:
"A search action was carried out by the Economic Offence Wing CID, Bangalore on 05.08.2015 in M/s PSK Finance Solutions Pvt. Ltd. group. Based on the input, search u/s 132A of the I. T. Act was carried out o n 08.08.2015. Various material/do cuments etc. were found and seized and statements of var ious perso ns were also recorded. The original return was e-filed u/s 139 of the Act on 20.03.2017, declaring an income of Rs.2,26,32,890/-, which w as proces sed u/s 143(1) of the Act. Penalty proceedings u/s 271F of the Act are initiate d for late filing of return of income. Notice u/s 143(2) of the Act was issued on 27.09.2017 and duly served upo n the assessee.
2. The CCIT(Central) accorded administrative approval for centraliza tion 14 cases of the gro up with the Central Circle-28, New Delhi. The case was centralized with this C ircle vide order u/s 127 of the 3 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
Act o f the Pr. Commissioner of Income Tax, Delhi-7, New Delhi bearing F. No. Pr. CIT-7/72 /66/ Centralization/2017-18/994 dated 16.10.2017. No tice u/s 142(1) of the Act was issued to the asses see company on 17.10.2017. Notice u/s 142(1) of the Act alongwith questionnaire was issued to the asses see on 31.10.2017, asking for various relevant documents/particulars. The assessee company vide letter dated 15.11.2017 furnished the co py of return of income e-filed u/s 139 of the Act declaring an income of Rs.2,26,32,890/-. Notice u/s 143(2) and 142(1) of the Act (Specific questionnaire ) was iss ued to the assessee on 04 .12.2017 . Further, notice u/s 142(1) of the Act was issued to the assessee on 22.12.2017.
3. In response to the above statutory notices, Sh.
Naveen P. Patil and Sh. Niraj Kumar Chaubey,
Advocate, AR s of the asse ssee attended the
proceedings o n behalf of the assessee and filed the details as called for which were examined and placed on re cord and the case was discussed with them.
4. During the year under consideration the assessee company in its return of income filed u/s 153A of the Act has show n loss of (-) Rs.23,11,687/- under the head 'Business or Profession', income of Rs.47 ,28,578/- under the head 'Income from Ho use Property' and income of Rs.2,02,16,000/ - under the head 'Income from Capital Gain'.4 ITA No. 663/Del/2021
PSK Finance Solutions Pvt. Ltd.
5. During the course of search operation carried out by Economic Offe nce Divis ion, CID, Bangalore at Go lden Grand Apartment, Maple Block, Flat No. MB 6 02, Yeshwantpur, Bengaluru cash amounting to Rs.4,37,50,000/- was found and seized. The state ment of Sh. Atul Mohan, Dire ctor of the assessee company was recorde d on 20.08.2015 on oath u/s 132(4) at C-69, Sector 30, Noida, UP, wherein, he has stated that the cash found and seize d during the cour se of search opera tion belo ngs to the assessee M/s PSK finance Solutio ns Pvt. Ltd. and the same is not accounted in regular books of account of the assessee company. Further in the said state ment he has also voluntar ily agreed to offe r to tax the cash found and seized amounting to Rs.4,37,50,000/- by taking into the books of accounts as income in addition to the regular income for the curre nt financial year , i.e., Financial Year 2015-16. Further, he also agreed to pay the taxes as applicable as per the provisions of the Income tax Act. However, from the perusal of return of income filed for the year under consideration on 06.11.2017 in re sponse to the notice u/s 153A of the Act dated 17.10.2017, such amount is not disclosed in the retur n and no tax has been paid on it.
4..........The re levant portion of the show cause is reproduced as below:
".....2. A search action was carrie d out on the asse ssee on 08.08.2015 at Golden Grand Apartment, Maple B lock, 5 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
Flat No . MB 602, Yeshwantpur, Be ngaluru. Dur ing the course of search operation carrie d out by Eco no mic Offence Division, CID, B angalore at Golden Grand Apartment, Maple Block , Fla t No. MB 602, Yeshwantpur , Bengaluru cash amounting to Rs.4,37,50,000/- was found and seized as per the details below:-
Sr . No . Pr e m i s e s Ca sh (R s.)
Fou n d S ei z ed
1. 6 02 , M B , M a p l e B lo ck , 4 37 5 00 0 0 4 37 5 00 0 0
G ol d en Gr a n d ,
Ba n g a l or e
2.1. A Statement was recorded on oath u/s 132( 4) of S h. A tul Mohan, Director o f the assessee company o n 20.08.2015 at C- 69, Sector 30, Noida, UP, whe rein, he has stated in his sworn statement that the cash belongs to the M/s PSK finance Solutio ns Pvt. Ltd. and the same is no t accounted in regula r books of acco unt. T he r eleva nt portion of the statement is repro duced below for re ference:-
"Q .21 I am sho wing yo u the details of cash of Rs.4,37,50,000/-
as per annexure C/PSK w hic h was seized by the C ID, Economic Offe nce Div isio n, Bangalo re during the search on 05 8s 06 August 2015 at F lat No. 602 MB, Maple Block , Go lden Grand, Bangalore which w as subsequently seized by the Income Tax Department, Bangalore on 08.08.2015. Pleas e give the details of owne r of the s ame and a lso so urce fo r the same.
Ans: The cash of Rs.4,37,50,000/- seized at Flat N o.602 MB, Maple Block, Go lden Gra nd, Bangalore, is generate d out of business activates carried o ut by M/s PSK Finance Solutions Pv t. Ltd., in and around Bangalo re city which has not been acco unted in the book s of accounts of the 6 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
said company and also I am not in a position to produce any doc umenta ry evide nce for the r eceipt of the s ame.
Q.22 As you a re not able to substa ntive the source of cash of Rs.4,37,50,000/- which w as se ize d by the CID, Econo mic offence Divisio n, Bangalo re dur ing the search o n 05 & 06 August 2015 at F lat No . 602 MB, Maple blo ck, Go lden Grand, Bangalore whic h w as subsequently se ize d by the Income Tax Department, Bangalo re on 08.08.2015, w hy the same should not be tre ate d as unaccounted. Please give yo ur comment of the same.
Ans: Sir , I am no t in a position to produce the documentary evide nce for ge neratio n of abo ve seized cash, but I state here that the balance sheet of M/s. PSK Finance Solutions Pvt. Ltd. justifie d the fact that it w as actively purs uing real estate bo th in Delhi NCR and Bangalore.
I therefore, vo lunta rily agree to offer to tax the cas h seized of Rs.4,37,50,000/- by tak ing into the books of accounts as incom e in a dditio n to the regular income for the curre nt financial year, i.e. Financial Year 2015- 16. I also hereby agree to pay the taxes as applicable as per the pro vis ions of the Income tax Act."
However, from the perusal of return of income for A.Y. 2015-16 file d on 06.11.2017 in res ponse to the no tice u/s 153A date d 17.10.2017, such amount is not disc losed in the return and no tax has been paid.
You are therefore requested to e xplain as to why an amount of Rs. 4,37,50,000/- be not added to yo ur income for the F.Y. 2015-16 i .e. A.Y . 2016-17."
7 ITA No. 663/Del/2021PSK Finance Solutions Pvt. Ltd.
5.2. In response to this the assessee company furnished its reply vide letter dated 07.12.2017, wherein the assessee company stated that in the statement of Sh. Atul Mohan recorded on 20.08.2015 at C -69, Sector 30, Noida, U.P., at the time of recording of state ment Sh. Atul Mo han was not in a position to produce any documentary evidence with respec t to the c ash. Further state d that at that point of time he was told to have no option but to offer it to tax and the statement was recorded accordingly which he never intende d to do so without verifying with his Bangalore Counter Part Sh. Jai Shiv Saxena and further stated that the premises was under the control of Sh. Jai Shiv Saxena.
5.3. Further in its reply, the assessee company also reproduced the statement of Sh. Atul Mohan, Director of M/s PSK Finance Solutions Pvt. Ltd recorded on 20.08.2015 and 27.08.2015 (recor ded after more than 2 weeks of search) and again sta ted that the cash found and seized is belongs to Sh. Jai Shiv Saxena, who is handling the real es tate business of the assessee company. It is further state d in the statement that the said cash i.e. the cash found a nd seized during the course of se arch opera tion at the premises of the assessee company M/s PSK Fina nce Solutions Pvt. Ltd. at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore belongs to Sh. Jai Shiv Saxena which he derived from the sale of shares in cash to some NRI and the cash w hich 8 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
was found and seized belongs to him, which was kept at the Bangalore premises of the assessee company.
5.4. The reply of the assessee has duly been considered but not found acceptable and rejected in view of the follow ing facts:-
i) During the course of search o peration at Flat no.
602, MB Maple Block, Golden Grand Bangalore c ash amounting to Rs. Rs.4,37,50,000/- wa s found and seize d in the possessio n of the assessee company. In the statement of Sh. Atul Mo han Director of the assessee company in his swor n statement recor ded u/s 132(4) of the Act on 20.08.2015 on oath u/s 132(4) at C-69, Sector 30, Noida, UP which is a residential premises of Sh. Atul Mohan, Director of the assessee company, Sh. Atul Mohan has voluntarily stated that the cash found and seized during the co urse of search operation be longs to the assessee company M/s PSK finance Solutions Pvt. Ltd. and the same is not accounted for in the regular books of acco unt of the assessee company. Fur ther in his sworn statement he has also voluntarily agr eed to offer to tax, the cash found and seized amounting to Rs.4,37,50 ,000/- by taking into the books of accounts as income in addition to the regular income for the curre nt financial year , i.e., Financial Year 2015-16. Fur ther, in his swor n statement he also agree d to pay the taxes as applicable as per the provisions of the Income tax Act.
9 ITA No. 663/Del/2021PSK Finance Solutions Pvt. Ltd.
ii) Further in the second stateme nt of Sh. Atul Mo han which was recorded 27.08.2015 wherein he has state d that Sh. Jai Shiv Saxena is his family fr iend and was residing at Bangalore searched premises and was looking after the company operations at Bangalore from the flat. How ever, no supporting evidence that Sh. Jai Shiv Saxena was using that premises, has been furnished. Further, no supporting documentary evidence with respect to his natur e of job, duties performed by him and pos ition held in Assessee Company was furnished as Sh. Jai Shiv Saxena is neither a Director of the asses see company nor was holding any shares in the asses see company and was not also the emplo yee of the asses see company. Moreover, the document, if any, furnis hed in this regard, the assessee failed to establish the authe nticity of the same. Therefore, the assessee company failed to establish the connec tion betw een Sh. Jai Shiv Saxena and the assessee company.
iii) Although in his sworn statement Sh. Atul Mohan, Director of M/s PSK Finance Solutions Pvt. Ltd. himself admitted that the cash found and seized during the co urse of search operation at Bangalore premise belongs to the assessee company i.e. M/s PSK Finance Solutions Pvt. Ltd., he no t even o nce anywhere in his sworn statement recorded u/s 132(4) of the Act mentioned the name of any other perso n/person's with respect to the cas h found and 10 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
seize d during the course of search oper ation. In his sworn statement he has voluntary admitted that the cash found during search at Bangalore premise belongs to the assessee company.
iv) The s tory of the assessee company is also incomplete as no confirmation from the party, who is claime d to have purchased the shares in cash from Ms. Jai Shiv Saxena, has been furnished by the assessee company.
From the above discussion it is clear that it is nothing but the afterthought of the assessee created jus t to expla in the source of the cash found and seized in its possession from its pre mises.
5.5. Therefore, the co ntention of the assessee that the cash amounting to Rs. Rs.4,37 ,50,000/- found and seize d in its possessio n at its premise i.e. Flat no.
602, MB Ma ple Block, Golden Grand Bangalore
belongs to Sh. Jai Shiv Saxena could not be
expla ined and therefore, source of cash of
Rs.4,37,50,000/- remained unexplained and
unverifiable and an addition of Rs.4,37,50,000/-, is made to the income of the assessee company for the year under co nsideration."
4. Aggriev ed, the assessee filed appeal b efore the ld. CIT(A).
11 ITA No. 663/Del/2021PSK Finance Solutions Pvt. Ltd.
5. During the course of proceed ings before the ld. CIT(A), the a ssessee submitt ed the fo llowing:
"Issue involved - Addition of Rs.4.37 Crs. made towards cash seized from flat belonging to appellant co mpany at Bangalore dur ing search action u/s 132A.
Relevant Facts -
1. In the search action conducted at a flat belonging to PSK company at Bangalore on 05.08.2015, ca sh of Rs.4.37 crs. was seized. All directors of compa ny are base d in Delhi whereas the company is engaged in real estate transactions aro und Delhi and Bangalore. Initial state ment u/s 132(4) of Director, Mr. Atul Moha n was recorded at Bangalore on 20.08 .2015 wherein he stated that the said cash belonged to appellant company and was earned out of real estate transactions a round Bangalore.
2. In the next statement u/s 131 dated 27.08 .2015 recorded only a week after recording the first state ment, Mr . Atul Mohan [AM] clarified that the said cash belonged to one, Mr. Jai Saxena. It was explained that all directors were based in Delhi and henc e, the flat at Bangalore was in possession of family friend, Mr. Jai Saxena who use d to look after operatio ns of company around Bangalore.
3. On 04.09.2015, a retraction affidavit to this effect was also filed. On the basis of the same, the Dept. 12 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
conducted a survey action u/s 133A on premises of Jai Saxena on 11.09.2015. In the said action, documentary evidences were impo unded w hich proved that Mr. Saxena had earned huge undisclosed cash on s ale of share s of a co mpany, M/s. EAFT Technologies Pvt. Ltd. [manufacturer of Akash Tablets] to a UK based businessman. It was noticed that Mr . Saxena had earned unaccounted cash consideration ofRs.4.58 Crs. in A.Y. 2014-15.
4. In his stateme nt recorded u/s 131 during survey action, Mr. Saxena admitted to have earned such undisclosed cash. He further admitted that the said cash wa s kept by him at the flat of PSK Company at Bangalore. He state d that he was family friend of Mo han family and that he used to look after PSK company's operations around Banga lore since the directors were based in Delhi. Therea fter, he offered the said undisclose d cash as his income in the ITR filed for A.Y.2014 - 15 a nd due taxes along w ith interest has been paid by him. The said income has also been assessed in his hands in the asst, order padded u/s 147 for A.Y.2014-15. All the above facts clearly substantiated the claim of the appellant company that the cash of Rs.4 .37 Crs. found at its flat at B angalore represe nted undisclosed income of Mr. Jai Saxena for A.Y.2014 -15 and not o f PSK company.
A.O.' s contentions for making the addition of Rs.4.37 Crs. by treating the e ntire cash seized during search 13 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
actio n as undisclosed income in the hands of appellant company-
5. Firstly, the A.O. has held that in the initial statement u/s 132(4) dated 20.08 .2015, Mr. AM had admitte d that the said cash represent undisclo sed income of appellant company and hence, the appellant cannot go ba ck on its admission.
6. Seco ndly, the A.O. has stated that the appellant has not furnished documentary evidences to show business connection between appellant company and Mr. Jai Saxena and hence, he has disbelieved the claim of the appellant that the impugned cash belonged to Mr. Jai Saxena and no t to PSK company.
Assessee's contentions before Your Hono ur-
First reason stated by the A.O. for treating the cash of Rs.4.37Crs. as undisclosed inco me in the hands of the assessee company is not justifie d-
7. The initial statement u/s 132(4 ) dated 20.08.2015 was imme diately retracted by way of clarific ation iss ued in state ment u/s 131 dated 27.08.2015 recorded within seven days and also by way of filing affidavit dated 04.09.2015 within fifteen days. Thus, the said state ment was immediately retracted by the asses see.
8. It is to be noted that PSK company was incorporated in 2012 and till the date of search i.e. Aug 2015, it had not entered into any transactio n of sale of immovable 14 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
property. Hence, it w as impossible for the appellant company to have earne d such huge undisclosed c ash of Rs.4.37 Crs. w ithin three years from inception. Thus, it has been duly established that the initial stateme nt was prima facie incorrect and the factual assertion made there in was apparently incorrect. Accordingly, it is submitted tha t the reliance placed by the A.O. on the state ment u/s 132(4) is not justified in view of the fact that the said statement was immediately retracte d and especially when it was duly demons trated by the assessee that the factual assertion ma de in the said state ment was apparently incorrect.
9. The onus lying upon the appellant to explain the owner of the said cash seized from its premises has also been duly discharged by the appellant. It was explaine d that the said cash belonge d to Mr . Jai Saxena. The said explanation is duly substantiate d by way of-
a. Documentary evidence s impounded by Dept. during consequential survey action conducted o n Mr. Saxena's premises at Bangalore.
b. Admission of Mr. Jai Saxena in state ment re corded during survey action.
c. ITR filed by Mr. Saxena for A.Y.2014 -15 subsequent to survey by paying taxes with huge interes t thereon. d. Asst. order u/s 147 passed by A.O. in case of Mr. Saxena for A.Y.2014 -15 wherein the above undisclosed cash income offered by him as his income has been assessed in his hands.15 ITA No. 663/Del/2021
PSK Finance Solutions Pvt. Ltd.
10. Thus, the e xplanatio n furnished by the assessee regar ding source of the cash found during search action is duly substantiated by various documentary evidences. This cash has been owned by Mr. Jai Saxena upon payment of substantial taxes and huge interest thereon. Further, the assessee has also demons trated that it would have been impossible for the as sessee company to have earned such huge undisclosed cash within a shor t span o f three years from incorpo ration especially whe n no immovable property was sold within this period. On the other hand, it is to be note d that the Id. A.O. has not bro ught on record any corroborative evidence [apar t from the retracted state ment u/s 132(4)] to establish that the said cash belonged to the appe llant co mpany a nd not to Mr. Saxena. It is submitted that not an io ta of corroborative evidence whatsoever was found in the course of search action to even indicate that appellant company could have earned such huge undisclosed cash of Rs .4.37 Crs. within a period of three years fr om its incor poration. In view of the above facts, the assessee submits that the claim of the appellant company is substantiated by various documentary evidences whereas the contention of the A.O. is no t suppor ted by any cogent evidences and there fore, the addition made by the A.O. solely on the basis of the initial statement 132(4) which was immediately retracted by demo nstrating the said statement to be appa rently incorrect, is not justified in law and o n facts of the case.16 ITA No. 663/Del/2021
PSK Finance Solutions Pvt. Ltd.
Seco nd reason stated by the A.O. for treating the cash of Rs .4.37 Crs. as undisclosed income in the hands of the a ssessee company is not justified-
11. With respect to claim of A.O . that no documentary evidences were furnished to prove business connection between PSK company and Mr. Saxena, it is to be noted that in the asst. completed by the A.O. in case of Mr. Jai Saxena u/s 147 for A.Y. 2014-15, the A.O . has himself held that there was indeed business connection between Jai Saxena and PSK company and on the basis of this conclusion, the A.O. has himself made addition of around Rs.40 lakhs in hands of Jai Saxena. I t is to be noted that in Jai Saxena's case, the A.O. has held that the undisclosed cash earne d by Mr. Saxena in A.Y. 2014-15 was invested by him in real estate transactions through PSK company during F.Y. 2014-15 and that Mr. Saxena has earned undisclosed income @ 10% on such inves tment through PSK. The A.O. has made addition of around Rs.40 lakhs in hands of Jai Saxe na on the basis of the above conclusio n. Thus, it is submitted that the A.O. is not justified in taking a completely co ntrary stand while assessing the income of PSK company. Hence, the second reason stated by the A.O. is also not consonance w ith the se ttled principles of justice.
Leaving apart legal submissions, the following facts may please be appreciated to deter mine the genuine ness of claim made by the appellant company -
Theory of Human Preponderance:17 ITA No. 663/Del/2021
PSK Finance Solutions Pvt. Ltd.
12. If there was no connection between PSK company and Mr. Saxena, then there was no reason why PSK could have stated that the said cash belonged to Mr. Saxena, who is alleged to be an unaccounted person. Further, the truth lying in the claim of the appellant was also duly substantiated in view of the documentary evidences found during the consequential survey action conducted by Dept, on premise s of Mr. Saxena. It is to be no ted that if Mr. Saxena was not connected with PSK and that if the said cash did not belong to him, then it would have been virtually impossible that PSK would have known o f the undisclosed cash income earned by Mr. Saxena and in that case, no such details of manner of earning undisclose d income by Mr. Saxena could have been revealed by Mr . Atul Mohan during inves tigation proceedings. Thus, even the the ory of huma n preponderance clearly supports the genuineness of claim of the appellant.
No loss of Revenue: in fact, the Dept. could recover almost twice the quantum of tax liability in hands of Jai Saxena due to the disclosure / claim made by the assessee company -
13. Even from De pt.'s angle of tax collection, it is to be noted that there has been no loss of revenue to the Dept. due to the fact that the impugned undisclosed cash found in the premises of the asses see company is assessed as undisclose d income in the hands of Mr. Jai Saxena. In this regar d, it is to be noted that if the 18 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
seize d cash o f Rs.4.37 Crs. actually be longed to PSK company, then the same could have been offered to tax by PSK in its hands for A.Y.2016 -17. The total demand raised by the Revenue in the hands of PSK in that case would not have excee ded Rs.1.95 Crs. [which is the actual demand raised in the asst, order u/s 143(3) passed in case of PSK company] and no demand would have been raised in the case of Mr. Saxena in that scenario.
14. It is submitted that in that case, no proceedings would have been initiated in case of Mr. Saxena since no consequential survey action would have been c arried out in his case in the absence of the relevant disclosure of fa cts made by PSK company during post search proceedings. However, in view of the above disclo sure/cla im made by PSK during post search proceedings, Mr. Saxena admitted to have earned huge undis closed income on sale of shares of Rs.6.25 Crs. in A.Y. 2013-14 & 2014-15 [out of which Rs.1.67 Crs was undis closed sale consideration received through banking channel whereas Rs.4.58 Crs. was undis closed sale consideration reed, in cash in A.Y.2014-15]. It is to be noted that due to the said admiss ion, the assts. u/s 147 were completed in case of Jai Saxena fo r A.Y. 13-14 and 14-15 and the total tax liability inc luding interest liability assessed in the hands of Mr. Saxena for a bove two years is Rs.3.78 Crs. Thus, it is to be noted that there has been no loss of Revenue to the dept, due to the claim made by appellant and in fact, 19 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
almost double revenue has been recovered by the Dept, due to above disclosure made by PSK co mpany. In view of the above facts, the claim made by the appellant company may please be accepted and justice may be granted.
In view of the above facts, it is humbly prayed that the Id. A.O. may please be directed to assess the impugned seize d cash a s undisclosed income in the hands of Mr. Jai Saxena for A.Y.2014 - 15 as has already bee n done in the asst, completed u/s 147 in his case and the said cash may not be assessed as undisclosed income in the hands of the assessee company.
In case, any further clarificatio n is required, the same would be submitted on hearing from Your Honour.
During the course of proc eedings before the ld . CIT(A), the assessee submitted its supplementary submissions which are as und er:
"1] ....
2] Relevant Facts -
The statement of the director of the appellant
company, Shri Atul Mohan was recorde d u/s 132(4) on 20 .08.2015 at his residential premises located at C
- 69, Sector 30, Noida, Uttar Pradesh. In the said state ment, Mr . Mohan stated that the said cash was generated out of unaccounted real estate transac tions carried out by the assessee co mpany in and around 20 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
Bangalore. It was further state d that he was not in a position to produce any documentary evidences to prove the above receipts and hence, he agree d to offer the said cash as undisclosed income in the hands of the assessee company for A.Y. 2016-17. The copy of the said statement dated 20.08 .2015 of Shri Atul Mohan recorded at New Delhi is enclosed a t Sr. No. 3 of the Paper Book. The relevant e xtract o f the above statement is reproduced hereunder for ready reference -
Q.21 I am showing you the details of cash of Rs.4,37,50,000/- as per annexure C/PSK which was seize d by the CID, Economic Offence Division, Bangalore dur ing the search on 05 & 06 August 2015 at Flat No.602 MB, Maple B lock, Golden Gr and, Bangalore which was subsequently seized by the Income Tax Department, Bangalore on 08.08.2015. Please give the details of owner of the same and also source for the same.
Ans.: The cash of Rs.4,37,50,000/- seized at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore, is generated out of business activates carried out by M/s PSK Finance Solutions Pvt. Ltd. in and around Bangalore city which has not been acco unted in the books of accounts of the said company and also I am not in a position to produce any documentary evidence for the receipt of the same.
21 ITA No. 663/Del/2021PSK Finance Solutions Pvt. Ltd.
Q.22 As you are not able to substantive the source of cash of Rs.4 ,37,50,000/- which was seized by the CID, Economic offence Division, Bangalore during the search on 05 & 06 August 2015 at Fla t No.602 MB, Maple block, Golden Grand, Bangalore winch was subse quently seized by the Income Tax Department, Bangalore on 08.08.2015, why the same should not be treated as unaccounted. Please give your comment of the same.
Ans.: Sir, I am not in a position to produce the documentary evidence for generation of above se ized cash, but I state here that the balance sheet of M/s. PSK finance Solutions Pvt. ltd. justified the fact that it was actively pursuing real estate both in Delhi NCR and Bangalore .
I therefore, voluntarily agree to offer to tax the cash seize d of Rs.4,37,50,000/- by taking into the books of accounts as income in addition to the re gular inc ome for the curre nt financial year , i.e., Financial Year 2015-16. I also hereby agree to pay the taxes as applicable as per the provisio ns of the Income tax Act.
2.2] Thereafter, on 27.08.2015 , subsequent state ment u/s 131 of Shri Atul Mohan was recorded a t the Bangalore at the Office of DDIT (Inv.), Unit - 1(1), Room No.206, C.R . Building Anne xe, Bangalore. In the said statement, Shr i Atul Mohan stated that the cas h amounting to Rs.4,37,50,000/- found at the premises of the appellant 22 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
company at B angalore was kept by and belonge d to one , Shri Jai Shiv Saxena w ho was looking after the o perations of the appellant company in Bangalore and who w as having the custody of the impugned flat at 602MB, Golden Grand, Bangalore. The copy of the said statement is enclosed at Sr. No. 4 of the Paper Book. The relevant extract of the state ment of Shri Atul Mohan dated 27.08.2015 is reproduced hereunder for ready reference-
Q.6. As you have stated that the flat at 602 MB, Maple Block, Golden Grand Apartment, Yeswanthpur, Bangalore is the property of compa ny M/s PSK Finance Solutions Pvt. Ltd., Please state that why the perso nal documents pertain to Shri Kapil Mohan S/o Shri Nareeh Mohan Saxena and Dr. Richa Saxena w/o Shri Kapil Mohan have been found and seized by Economic Offence Division (EOD), CID, Bengaluru which are s ubsequently seized by Income tax Department.
Ans.: Sir, as the renovation of the house of Shri Kapil Mohan who is my bro ther, was going on during the last month he nce he had given the folders of his and his wife's personal documents for safe keeping to one Mr. J. Saxena who might have placed at above mentioned fla t.
Q.7. Please state who is Mr. J Saxena and how he is related to you or your brother's family. You are also required to state how he is having the access to the office of M/e PSK Finance Solutions Pvt. Ltd. at 602 23 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
MB, Maple Block, Golden Grand Apartment, Yeswanthpur, Bangalore.
Ans.: Mr. J Saxena is our family fr iend and he also looks after company operation,-, m Bangalore , As being a family friend, a set of keys of office of M/s PSK Finance Solutions Pvt. Ltd. situated -at 602 MB, Maple Block, Golden Grand Apartment, Yeswanthpur, Bangalore have been handed over to him, so tha t he can take care the operations of company from the flat.
Q.8. Please give the complete address and contact details of Mr . J Saxena. Please also provide the detailed information that how did you co me in contact with him with what pur poses.
Ans.: His full name is Shr i Jai Shiv Saxena, he is our family friend whom we know him last 15 years . He was in the business of software development and real estate consultation and off late he is o nly into real estate. His present office addre ss is at 135B, Brigade Garden, Church Street, Bangalore-01 and his contact number is 09020900011. He is involved in affairs of PSK Finance Solutions Pvt. Ltd. since its inception.
Q.9. As you have stated in reply to Q.6. that Mr. Ja i Shiv Saxena is involved in the affairs of M/s PSK Finance Solutions Pvt. Ltd., please state his role and respo nsibilitie s in M/s PSK Finance Solutions Pvt. Ltd.
24 ITA No. 663/Del/2021PSK Finance Solutions Pvt. Ltd.
Ans.: As he is a clo se family friend who also has rich know ledge of real estate marke t in Bangalore, we had taken his advice for investing and also for marketing for properties purchased. Further, in the year 2013, he had expressed his interest in joining the company as one of the investors by subscribing equity. He was in the process of disinvesting his holding in software business, he had assured to invest the proceeds in PSK Finance Solutio ns Pvt. Ltd. He was also interested in investing some of the good properties which the company had loca ted near Delhi and Bangalore. He nce from 2013 he started investing with the company. Thereafter, in April 2015 Mr. Jai Saxena expressed his desire to withdraw his inve stment made along with co mpany for his new venture. There fore after April 2015, he might have kept the cash in the above said pre mises.
Q 10. As you have stated in your reply to Q.No.9 that Mr. J Saxena has given a cash of Rs.5 Crores with the intention to invest in the property, Please state do you have any agreement or Moll in this regard.
Ans.: There must be a MoU. Kindly provide me some time to ascertain the same and produce before yo u.
Claim of the appellant company made vide letter dated 04.09.2015 filed before DDIT (Inv.), B angalore clarifying that the impugned cash belonged to Mr. Jai Shiv Saxena and not to the appellant company -
25 ITA No. 663/Del/2021PSK Finance Solutions Pvt. Ltd.
As stated earlier, the registered office of the appellant company is based in New Delhi whereas the Directors and major share holders of the appellant company also used to re side in Noida/ New Delhi. It is submitted that the operations o f the appellant company were looked after mainly by Mr. Jai Shiv Saxena, who was a family friend of the Dir ectors of the appellant company. Mr . Saxena was engaged in the business of real estate and he was based in Bangalore and hence, in view of the fact that all the directors of the appellant company were residing in No ida, the operations of the appella nt compa ny at Bangalore were looked after by Mr. Saxena. It is to be noted that the initia l statement u/s 132(4) recorded at Noida, Mr. Atul Mohan had s tated that the impugned cash se ized from the Bangalore pre mises of the appe llant company was generate d out of real estate transactions carried out by the appellant company in and around Bangalore. Further, on being asked regarding the sources of cash seized from the Bangalore premises, Mr . Atul Mohan stated that he was not in a position to furnis h any documentary evidences to pro ve the generation of the above cash.
2.3.1 ] Thereafter, after visiting Bangalore, Mr. Atul Mohan properly verified the records of the appellant company and sought the de tails and evidences regarding sources of the cash seize d from the Bangalore premises from Shri Jai Shiv Sa xena. At that time, Mr. Atul Mohan found out that the entire cash of Rs.4,37,50,000/- found at the premises of the appellant company i.e. the flat at Bangalore belonged to Mr. Jai Shiv Saxena and it was kept by him at the said flat since the said flat was in the custody of Jai Shiv Saxena who used to look 26 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
after the operations of the appellant company at Bangalore. On getting aware of the a bove facts, Shri Atul Moha n filed a letter dated 04.09.2015 with the DD IT (Inv.), Unit - 1, Bangalore wherein it was clarified that the impugned cash found at the Bangalore premises of the appe llant company be longed to Shri Jai Shiv Saxena and the sources of earning the sa id cash by Mr. Saxena were also clarified in the said le tter. It w as state d that the above cash was earned by Mr. Saxena on sale of share s of a company and the said amount was not offered to tax by Mr. Saxena. Accor dingly, it was clar ified that the impugned cash did not represent undisclo sed income of the appellant company but the same represented undisclo sed income belonging to Mr. Jai Shiv Saxena.
The copy of the said le tter is enclosed at Sr. No. 5 of the Paper Book whereas the entire extract of the said letter is repro duced hereunder for ready reference -
04.09.2015 To The D y. Director of Income Tax - Investigation Unit-1, Bangalore Sir, Sub: Statement u/s 132 of the Income Tax Act, 1961- Clarification.
With reference to the above, I would like bring to your kind notice that in my statements recorded u/s 27 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
132 of the Income Tax Act, 1961 on 6 t h August, 2015, 20 t h August, 2015 and 27 t h August, 2015, I have state d that ca sh found in the premises o f PSK Finance Solutions Pvt. ltd. at flat No. 602 MB, Golden Gr and, Yeshwanthpur, Bangalore on 5th August, 2 015 pertains to the company PSK Finance Solutions Pvt. Ltd. as I was not able to produce any documentary evidence in support of the cash found. As such I had offered to tax the said sum in the hands of PSK Finance Solutions Pvt. Ltd. for the Financial Year 2015-16.
However, after ascertaining the activities and the opera tions carried on from the said pre mises by Mr. Jai Shiv Saxena, I realized that the cas h found does not belong to the company.-1 was under the impression that this was profits made on behalf o f the company by myself and Jai Shiv Saxena at Bangalore. Now, I am given to understand that the entire cash belongs to Mr . Jai Shiv Saxena. I also understand that this also represents profit earned by him on sale of share s held by him in his one of the companies.
In the circumstances, I would request your goo dself to kindly allow me to correct my earlier statements given o n 20th August, 2015 under Q uestion No. 21 and 22 as below:
Q. 21 I am showing you the details of cash of Rs.
4,37,50,000/-as per annexure C/PSK which was seize d by the CID, Economic Offence Division, Bangalore dur ing the search on 05 & 06 August 2015 28 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore which was subsequently seized by the Income Tax Department, Bangalore on 08.08.2015. Please give the details of owner of the same and also source for the same.
Ans.: The cash of Rs. 4,37,50,000/- seized at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore, is generated out of business activates carried out by M/s PSK Finance Solutions Pvt. Ltd., in and around Bangalore City which has not been accounted in the books of accounts of the said company and also I am not in a position to produce any documentary evidence for the receipt of the same."
Corr ected Statement of Answ er to Question No. 21.
The cash of Rs. 4,37,50,000/- seized at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore is generated by Mr. Jai Shiv Saxena out of sale proceeds of share he ld by him in one of his companies and that the said income should be taxed in the hand of Mr. Jai Shiv Saxena.
"Q. 22 As you are not able to substantive the source of Ca sh of Rs. 4,37,50,000/- which was seized by the CID, Economic Offence Division, Bangalore during the search on 05 & 06 August 2015 at Flat No. 602 MB, Maple Block, Golden Grand, Bangalore which was subse quently seized by the Income Tax Deportment, Bangalore on 08.08.2015, why the same should not 29 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
be treated as unaccounted. Please give your comment of the same.
Ans.: Sir, I am not in a position to produce the documentary evidence for generation of above se ized cash, but I state here that the balance sheet of M/s PSK Finance Solutions Pvt. Ltd. justified the fact that it was actively pursuing real estate both in Delhi NCR and Bangalore .
Corr ected Statement of Answ er to Question No. 22.
Cash seized belongs to Mr. Jai Shiv Saxena and not to PSK Finance Solutions Pvt. Ltd and also that PSK Finance Solutions Pvt. Ltd. has not realized any such gains and that I am also not having any documentary evidence to substantiate the e arnings/profits made by the company. Mr. Jai Shiv Saxena will provide the necessary documentar y evidence in support thereof.
Further, I would also wish to clarify that though we had discussed the terms a nd conditions of MOU, the same wa s not ultimately signed, hence there is no signed MoU between us.
Admission of Shri Jai Shiv Sa xena in the course of survey action u/s 133A conducted o n him claiming that the cash seized from the premises of the appellant company belonged to him (on the basis of impounded do cuments found relating to sale of shares and receipt of unaccounted sale consideration)-30 ITA No. 663/Del/2021
PSK Finance Solutions Pvt. Ltd.
2.4] It is submitted that thereafter, a consequential s urvey operation u/s 133A of the Income Tax Act was conducted o n the business premises of Shri Jai Shiv Saxe na at Office No. 135, B Brigade Garde n, Church Street, Bangalore. In the course of the survey action, the De pt. notice d that Mr. Saxena was looking after the operations of the appellant company at Bangalore since the year 2013.It was further noticed that prior to 2013, Shri Saxena was a promoter and shareholder in a company named, M/s. EAFT technologies Pvt. Ltd. which was engaged in software development business. In the course of survey action conducted on Shri Jai Shiv Saxena, an agr eement dated 11.02.2012 entered be tween EAFT Technologies Pvt. Ltd., the Promoters (including Mr. Saxe na) and an Investor company, M/s. Mesostre fia Ltd. owned by one, Mr. Arjun K. Vekaria, a UK base d businessman, was found and impounded. An MOU entered between the above parties w as also attached to the said agreement and the said MOU was also impounded. The said agreement and MOU co ntained details of sale of shares of EAFT Technologies Pvt. Ltd. executed by the promoters (including Mr. Saxena) to the company owned by Mr. Arjun Vekaria.
2.5] In the course of the survey proceedings u/s 133A, the state ment of Shri Jai Shiv Saxena was recorded u/s 131 on 11.09.2015 wherein he was questioned regarding the sale of share s made as per the abo ve impo unded agreement and whether the same was offered to tax by him. In his statement recorded on o ath, Mr. Jai Saxena admitted that he had received total consideration of R s. 6,25,97,924/- on sale of shares to Mr. Arjun Vekaria and his company during A.Y. 2013-14 and 2014-
15. Out of Jhe said consideration, Rs.4,58 ,29,664/- was 31 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
received in cash whereas the balance amount of Rs.1,67,68,260/- was received through banking channel In his state ment recorded on oath, Mr. Saxena further stated that he was looking after the operatio ns of the appellant company at Bangalore and that the premises ow ned by the appellant company at Flat No. 602 MB, G olden Grand, Bangalore w as in his custody/ possession. In the said statement, Mr. Saxena admitted that the cash of Rs.4,37,50,000/- se ized from the above premises was belonging to him and that the same was earned out o f sale of shares of EAFT Technologies Pvt. Ltd. which was not offered to tax by him. The copy of the statement of Shri Jai Shiv Saxena dated 11.09.2015 and his statement recorded on 14.09.2015 in continuation of the sa id statement is enclosed at Sr. No. 7 of the Paper Book.
Claim reiterated by Shri Jai Shiv Saxena that the cash seized from the premises of the appellant company belonged to him before the Kar nataka Lokayukta-
2.6] In the meanwhile, while the investigation by the Income Tax Dept, was under progress, the Office Of Superintendent of Police, Karnataka Loka yukta summoned Mr. Jai Shiv Saxe na on 19/10/2015 for interrogation regarding the seizure of above cash and he was subsequently taken into c ustody. It is submitted that even in the interrogation proceedings before the Lokayukta, Mr . Saxena has claimed that the cash amounting to Rs.4,37,50,000/- which was se ized from the premises of the appellant company at Bangalore belonged to him and claimed that the said seized cash may be returned to him. It is submitted that in support of his claim, Mr. Saxena also 32 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
produced substantiating documentary evidences in the form of ROC records giving share transfer details, Agree ment and MOU dated 11.02.2012 impounded from his pr emises, bank state ment showing par t consideration on sale of s hares received through banking channel from Arjun Vekaria owned company etc. before the Lokayukta. The relevant documents in respect of the Lokayukta proceedings are e nclosed at Sr. No .9 of the Paper Book.
Revised retur n filed by Shri Jai Shiv Saxena for the relevant years offering to tax the entire sale consideration of shares (including the unaccounte d cash cons ideration of Rs.4,58,29,664/-, which formed source of the cash seized from the premises of the appellant company) -
2.7] It is submitted that thereafter, on 29.07.2016, Shri Jai Shiv Saxena voluntary filed revised retur ns for A.Y.2013-14 and 2014-15 before his Jur isdictional A.O. i.e. ITO, W ard 1, Shahdol wherein the additional income on account of long term capital gains on sale of the above shares (including the undis closed cash consideration of Rs.4,58,29,664/-) was offer ed to tax. The copies of the said revised retur ns filed by Shri Jai Shiv Saxena are enclosed at Sr. No. 11 of the Paper Book.
The additional income on account of sa le of shares (including unacco unted cash consid eration of Rs.4,58,29,664/ -) assessed to tax in the hands of Jai Shiv Saxena by the A.O. (on the basis of t he admission made by Jai Saxena in his st atement u/s 131) in the asst, orders passed u/s 143(3) r.w.s. 147 for A.Y .2013-14 and 2014-15.33 ITA No. 663/Del/2021
PSK Finance Solutions Pvt. Ltd.
2.8] It is submitted that thereafter, the case o f Shri Ja i Shiv Saxena for A.Y.2013-14 and 2014-15 was reopened by the A.O. by issuing notice u/s 148 dated 31.03.2018. The asst. u/s 143(3) r.w.s. 147 in his case for the two years has been completed on 24.12.2018. In the asst, orders passed in the case of Shri Jai Shiv Saxena, the A.O. has ass essed the long term capital gains declared by Shri Jai Shiv Saxena (inc luding the undisclosed cash consideration of Rs.4,58,29,664/-) as income of the Shri Saxena on the basis of the de claration given by Shri Saxena in his statement dated 11.09.2015. The copies of the impugned asst, orders passed in the case of Shri Jai Shiv Saxena for A.Y.2013 - 14 and 2014 -15 are enclo sed at Sr . Nos. 14 & 15 of the Paper Book. At this juncture, it is important to mention that the abo ve asst, orders in the case of Jai Shiv Saxena were passed on 24.12 .2018 whereas the asst, ordep incase of the appellant company was passed o n 29.12.2017. Therefore, the fact that the impugned undisclo sed income on sale of shares (which formed the source of the cash seized at the premises of the a ppellant company) has bee n assessed to tax in the hands of Shri Jai Shiv Saxena by the A.O. in his asst., was not made available to the A.O. of the appellant company who passed the present asst, or der u/s 143(3) on 29.12.2017.
Claim of the appellant company before the A.O. in the course of the asst. proceedings -
3] In the course of the asst, proceedings u/s 143(3) in the case of the appellant company, the A.O. noticed that the amount of cas h seized of Rs.4,37,50,000/- from the premises of the appellant company during the search action on 05.08 .2015 34 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
was not offered to tax as income in the return of income filed u/s 139 for A.Y.2016-17 by the appellant company on 20.03.2017. Accordingly, the A.O. asked the appellant company to show cause as to why the impugned amount of seized c ash of Rs.4,37,50,000/- should not be taxed as unexplained cash in the hands of the appellant company.
3.1] In respo nse thereof, the appellant filed a reply dated 07.12.2017 wherein the appellant claimed that the impugned cash found at the premise s of the appellant company represented the unaccounted income earned by and belo nging to Mr. Jai Shiv Saxena and the same did not represent the unac counted income earned by the appellant co mpany. In this regar d, it was explaine d that the initial declaratio n made by Mr. Atul Mohan in the statement dated 20.08 .2015 was given under misinterpretation of facts and without consulting the re levant perso n i.e. Mr. Jai Shiv Saxe na who was loo king after the operations of the appe llant company in Bangalo re from where the cash was seized. It was stated that the said statement was imme diately retracted vide letter dated 04.09.2015 filed with the DDIT (Inv.), Bangalore wherein it was clarified that the impugned cash represented unaccounted income of Mr. Ja i Shiv Saxena earne d by him from sale of shares and the same did not represent unaccounted income of the appellant co mpany.
3.2] It was e xplained that Mr. Saxena had also owned up the said cash and he had time and again asserted before the Income Tax Authorities as well as before the Karnataka Lokayukta tha t the impugned cash seize d from the premises of the appellant company belonged to him. He had admitted that 35 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
the said cash represe nted his unaccounted inco me whic h was earned by him on sa le of stake/ shareholding of a company wherein he was a promoter to a UK based busine ssman. It was explained by the appe llant that the above claim made by Mr. Saxena before the Income Tax Dept, and Karnataka Lokayukta was further substantiated/ proved by the docume ntary evidences in the form of Agreement and MOU dated 11.02.2012 for transfer of shareholding by Mr. Saxena to UK based businessman, which was found and impounded in the course of survey action u/s 133A conducted on the premises of Mr. Saxena. Similarly, the fact of Mr. Saxe na having earned huge unac counted income on sale of shares was also proved by other documentary evidences like share transfer records obtained from MCA portal, bank stateme nt of Mr. Saxena etc. Thus, the appellant submitted that considering the categorical admission made by Mr. Saxe na which was a]so supporte d by substantiating evidences impounded during surve y proceedings and o ther evidences, there was no reaso n to trea t the said cash as undisclosed income belonging to the appellant company and not to Mr. Saxena.
3.3] The appellant further explained that as agains t the substantiating evidence s found at the premises of Mr. Saxena to prove that the impugned undisclosed cash represented unac counted income earned by him, no evidence s, whatsoever, were found in the cour se of the search action at the premises of the appellant company to indicate that the appe llant company had earned such huge quantum of unaccounted cash income. It was orally explained that the appellant company was incor porated in April 2012 and prior to the date of seizure of 36 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
cash i.e. 05.08.2015, the appe llant company had not sold any immo vable property since inception and ther efore, it was practically impossible that the appellant compa ny could have earned such huge undisclosed income of Rs.4.37 crores from any other source since its incorporation. In view of the above facts, the appellant stated that the seized cash belonged to Mr. Jai Saxena and the same should be treated as undis closed income in the hands of the appellant company.
3.4] Lastly, it was explained that the said amount was already offered to tax as additional inco me in the hands of Mr. Jai Shiv Saxena in the revised return filed by him pos t investigation proceedings and hence, taxing the same amo unt aga in as income in the hands of the appellant company would amount to double taxation which would be against the principles of justice. Accordingly, it was prayed that the impugned amount of seized cash of Rs.4,37,50,000/- should not be taxed as income in the hands of the appellant company. The copy of the reply dated 07.12.2017 filed by the appellant company before the A.O. is enclosed at Sr. No. 2 of the Paper Book.
Appe llant's submissions before Your Hono ur -
5] The appellant submits that the above additio n made by the A.O. is not justified o n facts and in law. At the outse t, the appellant submits that the cash seized from the premises of the appellant company represented unaccounted inc ome belo nging to Mr . Jai Saxena and the same could no t have been treated as undisclosed income in the hands of the appellant compa ny for the detailed submissions and reasons stated in the course of the asst, proceedings. It is submitted that the various reasons 37 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
state d by the A.O. for rejecting the claim of the appellant are not justified. The rebuttal of the appellant in respect o f the reasons stated by the A. O. for reje cting the claim of the appellant is as under-
Addition made by the A.O. mainly by relying upon the initial state ment of Shri Atul Mohan recorded on 20.0 8.2015 is not justified.
5.1] The A.O . has mainly relie d upon the initial statement of Shri Atul Mohan recorded at New Delhi on 20.08 .2015 wherein he had state d that the said cash seized from Bangalore premises of the appellant company belonged to the appellant company and the same represented undisclosed income earned from real estate transactions. The appellant submits tha t the reliance placed upon the A.O . on the said statement, by ignor ing the subseque nt retraction, explanation & evidences furnished by the appellant and admission made by Shri Jai Saxena, is misplaced. At the outset, the appellant submits that the assertion made by Mr. Atul Mohan in the initial statement dated 20.08.2015 was retracted by him by filing the letter dated 04.09.2015 w ith the DDIT (Inv.), Bangalore. In the said letter, it was clarified that the assertion made by Mr. Atul Mohan in the initial state ment dated 20 .08.2015 was made under misinterpretation of fa cts and after pro per verification of facts and records, it was no ticed that the impugned cash represented unac counted income belonging to Mr. Jai Saxena who was managing the operations of the appellant company at Bangalore and who was also having the custody of the premises of the appellant company wherefrom the cash was seized.38 ITA No. 663/Del/2021
PSK Finance Solutions Pvt. Ltd.
5.2] It is to be noted that the said fact was also accepted by Mr. Jai Saxena who claimed that the said c ash belonged to him. It is submitted that Mr. Saxena had a lso disc losed the sources through which he had earned t he impugned unac counted cash. The substantiating evidences in support of his claim were also found in the cour se of consequential survey proceedings u/ s 133A conducted by the Dept, on the pr emises o f Jai Sa xena on 10.09.2015. Further, the ownership of the said seized c ash was also claim ed by Mr. Jai Saxena in the interrogation proceedings before the Karnataka Lokayukta. It is to be noted that in the statement of Mr. Saxena record ed in t he cour se of survey proceedings conducted in his case, he had stated that he was looking after the operat ions of the appellant company in Bangalo re and he was having the custody of the premises at Flat No. 602 MB, Golden Grand Appt., Bang alore. I n the said stat ement, he had categor ically admitted that the cash of Rs.4,37,50,000/- seized from the said premises b elonged to him and the same was sourced out of unaccounted income earned b y way o f sale of stake/ sharehold ing in a company wher ein he was a promoter. The said unaccounted income by way of cash seized from the premises of the ap pellant company was also offered to tax by Mr. Saxena by filing revised returns in his case with the Jurisd ictional A.O. at Shahdol on 29.07.2016. Subsequently, on the basis of the impugned admission made by Mr. Sax ena in his stat ement dated 11.09.2015, the A.O. has assessed huge unaccounted income on sale of shares to the tune of Rs.5 ,38,31,222/- and Rs. 84,16,702/- in the a sst, orders passed u/s 147 in 39 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
the case of Mr. Ja i Shiv Saxena for A.Y.2014-15 and A.Y.2013-14 respectively. In view of the above facts, it is to be apprec iated that the subsequent claim made b y the appellant by filing t he retra ction letter dated 04.09 .2015 is duly supported by documentary evidences, admission on oath of Shri Jai Shiv Saxena, revised returns filed b y Jai Saxena offering the amount of seized cash as his undisclosed income and the said claim has also been accepted by the Dept, itself while pa ssing the subseq uent asst , orders u/s 147 in the case of Shri Jai Shiv Saxena.
5.3] As against this, it is to be noted that no evidence whatsoever, was found by the Dept, in support of the initial asser tion made by Mr. Atul Mohan in his sta tement dated 20.08.2015 to the e ffect that the impugned seized cash represented unaccounted inco me earned by the appellant company from real estate transactions. In fact, it is to be noted that the appellant company was incorporated-on 27.04.2012. It is submitted that till the date o f search/seizure of cash i.e. 5 t h August 2015, the a ppellant company had not sold any immo vable property. Further, in the total income assessed by the A. O. for earlier years is as follows - A.Y.2 013-14 : Loss (Rs.36,240/-), A.Y. 2014-15 : Rs. 11,14 ,300/- [A.O. had made addition of Rs .26,32,185/- in respect of deemed dividend over and above Rs.11,14,300/-, which has been deleted by Hon'ble CIT(A)], A.Y.2015-16 : Rs. 10 ,87,420/-. Thus, in view of the quantum of income returned by the appellant co mpany for the earlier years and especially in view of the fact that the appellant has not entered into any real estate transaction of sale of immovable property till the date of seizure of cash from 40 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
its inception, it is practically impossible for the appellant company to have earned such huge unaccounted cash inco me of Rs.4,37,50,000/- from any other sources since its incorporation. Thus, it is submitted that in view of the above facts, it is duly demo nstrated that the initial assertion made by Mr. Atul Mohan in his statement date d 20.08.2015 is factually incorrec t and impro bable on the facts of the case.
5.4] It may also be noted that if the appellant company had earned such huge unaccounted income through any unacco unted transactions, then at least some evidence in the form of rough jottings, notings etc. would have been found during the extensive search proceedings conducte d by the Income Tax Dept, at all the premises of the appe llant company and its directors. However, it is submitted that no iota of evidence, was found in the course of the search proceedings to indicate that the appellant company had earned any unacco unted income, whatsoever, much less the huge alleged unaccounted cash income of Rs.4,37,50,000/-.
5.5] In nutshell, it is submitted that the appe llant had duly discharged the onus cast upon it to prove that the initial asser tion made by its director in the statement recorded on 20.08.2015 was factua lly incorrect and that the said assertion was practically impossible on the facts o f the cas e. Further, the subse quent claim made by the appellant by way of filing the retraction letter dated 04.09.2015 is substantiate d by evidences in the form of admissio n of Mr. Jai Saxe na before the I.T. Dept. as well as before the Kar nataka Lokayukta, impo unded documents found at his premises and o ther evidences, re vised 41 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
retur ns filed by Mr. Saxena offering the impugne d unacco unted income to tax. The A.O . has no t brought any contrary evidence to disprove the above claim made by the appella nt. In fac t, the A.O. holding the same Jurisdiction i.e. DCIT, Central Circ le 28, New Delhi has accepted the said claim in the asst, orders passed u/s 147 in the case of Mr. Jai Saxena. The A. O. has also not brought a ny evide nce on record to prove that the initial asser tion ma de by the appellant in the sta tement dated 20.08.2015 is correct.
5.6] In view of the above facts, the appellant submits that it has duly discharged the onus cast upo n it to prove that the initial assertio n made in the statement dated 20.08.2015 was factually incorrect and the appellant has also discharged the onus to subs tantiate the subsequent claim with docume ntary evidences. As against this, the A.O. has neither brought evidence on record to prove that the initial assertion ma de by the appellant in the statement dated 20 .08.2015 is correct nor has the A.O. brought a ny contr ary evide nce on record to prove that the subsequent claim made by the appellant in the retraction letter dated 04.09.2015 is incorrect. Therefore, in the absence of any co ntrary evidence to disprove the cla im of the appellant, it is submitted that the A.O. is not justified in making the a ddition o f Rs.4,37 ,50,000/- on acc ount of seized cash solely by relying upon the declaration made by Mr . Atul Mohan in the statement dated 20.08.2015.
5.7] In this respect, the appellant would like to reply upo n the ratio laid dow n by Hon'ble Delhi High Co urt in the case of CIT v. Sunil Aggarwa l [379 ITR 367]. In the said case, it has been held 42 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
that where the asse ssee had retracted from the earlier declaration given by him in the statement u/s 132(4) by furnishing a reasonable explanation and substantiating evidence in support of the retraction/ subseque nt claim, then in such circumstances , no addition can be made by the A.O. on the basis of the s tatement u/s 132(4) of the Act. The relevant facts in the said case are extracted from the judgment as under:
"5. In the assessment orde r, it was recorde d by the Assessing Office r (AO) that during the course of search cash amounting to Rs.86 lak hs was seized from the premises of Canara Bank, Ar ya Samaj Road, Karo l Bagh from an employee of the Assessee, o ne Mr. Gopal Singh. It was further recorded by the AO that a s tatement of the Assessee was rec orded during the course of search unde r Section 132( 4) of the Act. In re sponse to question No . 11, the Assessee is stated to have made a catego rical admiss ion that the said sum of Rs .86 lakhs belonge d to him; that it was being deposited by Mr. Gopal Singh in the Cana ra Bank account which was not the account of the Assessee; that ro utinely surplus cash was give n to Mr. Gopal Singh to be deposite d fo r w hich he was paid 5% of the c ash money; that the seized cash amount of Rs.86 lakhs represented "my undisc losed income not recorded in the Boo ks o f Acco unts ".
6. The Assessee retracted the above admission during the course of the assessment proceedings, but no t immediately after making the said statement. He star ted pro viding infor mation to the AO from 14 t h July 1997 onwards i.e . around two weeks before the deadline for finalization of the assessment i.e. 31 s t July 1997. In his retraction, the Assessee state d that 43 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
the s urrender was ma de under a mistaken belie f and "without looking into books of account and witho ut understanding law". He further stated tha t he had been "compelled perturbed by events of search and wherein I had no opportunity either to consult my advocates, my staff or my books of accounts etc. The pressure of search was built so much that I had to make this surrender without having actual possession o f the assets or unexplained investments or expenses incurred and hence there being no suc h income as undisclosed" . He claimed tha t the mone y seized already stood declared as out of known sources and the said surrender was meaningless. He did not admit that the surrender was vo luntary. The Assessee also offered an explanation regarding the said cash amount that these were from the undisclosed sales of disclosed purchases which were verified from the recor ds and the books o f accounts.
7. In the assessme nt order, the AO, however, declined to accept the above explanation o ffered by the Ass essee. He was of the view that the statement given by the Assessee voluntarily during the course of search under Section 132(4) of the Ac t had evidentiary value and could be relied upo n...."
On these facts, Hon'ble High Co urt held as under:
"13. T he narration of facts here inabove shows that the Assessee did no t simply re tract the statement made by him dur ing the course of surrender. He also o ffe red an explanation fo r the sum of Rs. 86 lakhs found in the hands of his emplo yee, Mr. Gopal Singh. One feature that distinguishes the present case from tha t before the Punjab and Hary ana High Court in Lekh Raj Dhunna(supra) is that 44 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
in the latter case, the Assessee failed to dis charge the onus on him through cogent m aterial to rebut the presumptio n that stood attracte d in vie w o f the state ment made under Section 132(4) o f the Act. In the pre sent case, as note d by the ITAT, the Assessee sought to explain the sa id amount with re ference to the entries in the bo oks of accounts o f the sales made dur ing the ye ar and the stock position. In other words, the AO did not find that the cash seized represented amounts not emanating from sales but some other source . The fact that the Asse ssee may have retracte d his statement belate dly did not relieve the AO from examining the expla nation offere d by the Assessee with re fe rence to the books of accounts produced before him.
14. Therefo re, although the counsel for the Revenue may be right in his submission that a statement under Se ction 132(4) o f the Act carries much greater we ight than the statement made under Section 133A of the Act, a retracted statement unde r Section 132(4) of the Act would re quire some corrobo rative material for the AO to procee d to make additions on the basis of such statement. Of course , where the retrac tio n is not for any convincing reason, o r whe re it is not s hown by the Assessee that he was under s ome coercion to make the statement in the first place, o r w here the retrac tio n is not fo llowe d by the Assessee producing material to substantiate his defe nce, the AO might be justifie d in make additions on the basis o f the retracted statement.
15. In the present case, the Assessee had an e xplanation for not re tracting the sta tement e ar lier . He also furnished an expla nation for the cash that was found in the hands of 45 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
his employee and this was ve rifiable from the book s of accounts. In the circumstances, it was unsafe for the AO to proceed to make additio ns sole ly on the bas is of the statement made unde r Section 132(4) of the Act, which was subse quently retracted."
5.8 The appellant submits that in the instant case, the retraction is made by the appellant within 15 days from recording the initial statement dated 20.08.2015. Further, the Director has explained that the initial statement was recorded at New Delhi and be fore recording the said s tatement, the Director had not verified the records and he had also not consulted/ obtained proper information from Mr. Jai Saxena, who was handling the operatio ns of the appellant company at Bangalore fro m the flat wherefrom the impugned cash was seize d. Thus, it was e xplained that the initial statement was given under confusio n and misinterpretation of facts . The Director explained that on visiting B angalore, after proper verification o f records and obtaining information from Mr. Jai Saxena, it wa s realized that the said cash found at Bangalore belonged to Mr. Jai Saxena and it w as not related to the operation of the appellant company. Hence, the retractio n was made within 15 days o f recording the initial statement. Further, the appellant also explained that the appellant company had been incorporated only three years ago and only no minal income was assessed for the earlier three years and therefore, in view of the fact tha t the appellant company ha d not so ld any immo vable property till the date of se izure of cash since its inception, then it was impossible that the appe llant company could have earned such huge unacco unted cash income of Rs.4.37 crores since its incorporation. Thus, the appellant 46 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
substantiated the fact that initial declaration made by it was prima-facie incorrect and practically improbable . It is to be noted that the subse quent claim made by the appella nt on retraction of the earlier statement was also substantiated by the admission made by Mr. Jai Saxena before the Income Tax Dept, and Karnataka Lokayukta and evidencing impo unded during survey action at the premises of Mr. Jai Saxena. The appellant further submits that the A.O . has no t brought any corroborative evidence on record to disprove the claim of the appellant. In view of the facts, the appellant submits that the facts in the instant case are similar to the facts in the case of CIT v. Sunil Aggarwal (cited supra) and hence, the decis ion of Hon'ble Jurisdictional High Court in the above case is squarely applicable to the case of the appellant. Accordingly, it is submitted that the addition made by the A.O. solely on the basis of the s tatement u/s 132(4) is not justified and the same may be delete d.
5.9 In this regard, the appellant would further like to reply upon the ratio laid down by Hon'ble Gujarat High Court in the case of Chetnaben J Shah Legal Heir of Jagdish Chandra K. Shah Vs. ITO[(2016 ) 140 DTR 0235]. In the said case, Hon'ble High Cour t has held that even in cases where it is not proved by the assessee that the statement u/s 132(4) was recorded under threat or coercion, still no addition can be made by the A. O. solely on the basis of declaration made by the assessee in the state ment u/s 132(4) if such statement is subsequently retracted by the assessee and the A.O. does not bring any corroborative evidence on record to prove tha t the amount admitted by the assessee in the statement u/s 1 32(4) ac tually 47 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
represents undisclosed income earned by the ass essee. In that case, Hon'ble High Court has approved and affirmed the decis ion rendered by the CIT(A) by holding that the CTT(A) has rightly apprec iated the position of law. The rele vant finding of the C IT(A) rendered in that case as reproduced in the order passed by Hon'ble Gujarat High Court is as under:
"24. It is a norm al presumption that --statement under section 132(4) is give n voluntarily unless it is proved otherwise. There is no e vide nce on record to s how that this statement wa s given in any coercion. T here fore, I am unable to agree with the assessee that it was a forced statement. B ut I am reasonably impresse d by the contention that this statement was subject to variation on eithe r side after v erificatio n i.e . assessee could re duce the disc losure made or the Assessing Officer could enhance the same if the facts and evidence so warranted. May be, even if this fact is not rrlentioned in t he statement itself, the point will still remain since i t is no body's case to get say any extra tax then is due . The reality remains that there is no ev ide nce what-so-e ver with the department even in conse quence of a serious actio n like search and seizure followed by deta ile d security which could support the ear ning of speculatio n income of Rs. 10,50,000/ - in this year. In othe r words, there is no evide nce to support the very existe nce of this income except the so c alled statement u/s 132(4) o f the Act. It defies logic that an assessee will o r should admit any inc ome which he had not earne d and which the depar tment had not found out. I do not find anything against the arguments that disclosure u/s. 132(4) was subject to variation and once the asse ssee had access to seize d documents and he re alized 48 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
subsequently that the re was no o ccasion to make this disc losure , he was having an inherent r ight to clar ify the situation so that he could be taxe d only on real income and no t on an income which was not there at all, since there was no evidence to pro ve otherwise too . In addition, the ver y important fact that rema ins that inspite of the search, no material/evide nce was found to show that the assessee was hav ing any o ther undisclosed assets whic h could be linked with this disclosure . In view o f the totality of the c ircumsta nces, arguments given by the as se ssee and re asoning as above , the addition made is de leted."
In that case, Hon'ble High Court held that the above de cision rendered by the CIT(A) was based on sound principles of law. Hon'ble Court held that the subsequent action of the Tribunal in reversing the order of the CIT (A) and confirming the addition made by the A.O. was not justified in law and therefore, the decis ion of the CIT(A) was upheld by Hon'ble Gujarat High Cour t.
6. In this respect, the appe llant would like to further rely upon the settled law that the presumption u/s 132(4A) is a rebuttable one. Therefore, the mere fact that the ca sh of Rs.4,37,50,000/ - was found in the possession of the appellant company, would not enable the A.O. to make addition by draw ing the presumption u/s 132(4A) since in the instant case, the appellant has duly demonstrated that the said cash belonged to a nother person i.e. Mr. Jai Shiv Saxena, who has also admitted the said fact before the Income Ta x Dept, a s well as be fore the Karnataka Lokayukta. Further, the said claim is also supported by substantiating evidences to pro ve the earning 49 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
of such unaccounted income by Mr. Jai Saxena which were found in the course of survey proceedings conducted o n his pre mises and other records. The appellant company has also demo nstrated that it is impossible for the appellant compa ny to have earned such huge unaccounted cash income within a span of three years from its incorporation, espec ially whe n no property was sold by the appellant company till the date of searc h. Thus, it is to be appreciated that the presumption drawn u/s 132(4A) that the impugned cash found from the possession of the appella nt company may belong to the appe llant, has been duly rebutte d by the appellant co mpany by furnishing substantiating evidences. Further, the A.O. has not brought on record any corroborative evidence whatsoever, to prove that the said cash belongs to the appe llant co mpany. In view of the above facts, the appellant submits that the presumption u/s 132(4A) has been successfully rebutted by the a ppellant in the instant case and hence, no addition on account of seized cash can be made in the ha nds of the appellant on the basis of the provisions of section 132(4A) of the Act.
6.1 In this regard, the appellant would like to rely upo n the follow ing de cisions wherein it has been held that the presumption u/s 132(4A) is a rebuttable one a nd no addition can be made solely on the basis of the said pre sumption once the same is rebutted by the assessee by offer ing reaso nable explanation:
a. P. K. Metrani vs. CIT [(Supreme Court) Civil Appeal No. 5673-5675/2012] date d 15.11.2006 held that, 50 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
"Searc h and seizure unde r Section 132 is a serious invasio n into the pr iv acy o f a citize n, the refore, it has to be construed strictly . Sub-section (4A) was inserte d by Taxation L aw (Amendment) Act, 1975 w ith e ffect from 1.10.1075 to permit a presumptio n to be raised in the circumstances mentione d therein. Befo re the insertion o f sub-section ( 4A) the onus of proving that the books of account, other documents , money bullion, jewe lle ry etc. found in possession or co ntrol o f a person in the course of a se arch belonged to that person was on the I ncome Ta x De pa rtment. Sub-sectio n ( 4A) enables an assessing autho rity to raise a rebuttable presumptio n that such books of account, money, bullion etc. belonged to such person The words in sub-sectio n (4) are "may be presumed". The presumptio n unde r sub-sectio n (4A) therefore , is a rebuttable presumptio n. T he finding recorded by the High Co urt in the impugne d judgment that the presumptio n under sub-section (4A) is a ir rebuttable presumption in so far as it re lates to the pass ing o f an o rder unde r sub-section (5) of Section 132 and rebuttable presumptio n fo r the purpose of framing a regular assessment is no t correc t. There is nothing either in Sectio n 132 or any other provisions of the Act which co uld warr ant s uch an inference or finding."
b. ITO vs. T. Abdul Majeed [169 TTR 440 (Ker)] held that, "I t is true that s. 132(4A) of the Act enables the Court to presume the truth of the contents of such books. Howe ver , it is a pre sumption which can be rebutted. Moreover, the presumptio n env isaged therein is only a factual pres umption. It is in the discretio n of the Court, de pending upon o the r fac tors , to decide w hether the presumption must be drawn. The expres sion used in the sub-section is 'may be presumed' as is used in s . 114 o f the Evidence Act, 1872. It is not a mandate 51 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
that whene ver the books of account are seized, the Court shall necessarily draw the presumption, irrespec tive of any other fac tors which may dissuade the Co ur t from do ing so ."
c. CIT vs. Tips Industries Pvt. Ltd. [321 ITR 154 (Bom)] held that, "I n these circumstances, the explanatio n give n by the assessee being re asonable and possible, the decis ion o f the Tr ibunal in accepting the contentio n of the asse ssee cannot be faulted. As held by the ape x Cour t in the case of P.R. Metrani vs. CIT (2006) 206 CTR (SC) 290 : ( 2006) 287 ITR 209 (SC), the presumptio n under s. 132(4A) is a rebuttable presum ptio n and in the present case, the asse ssee has successfully rebutted the presumptio n. In these ci rcumstances, the fourth question raised by the Re venue cannot be said to be a substantial question of law arising out o f the order o f the T ribunal."
6.2 The appe llant would also like to place reliance upo n the decis ion of Hon'ble Kerala High Court in the case of CIT vs . K.K. Abdul Kareem [132 CTR 431 (Kerala)] w herein it has been held that where the assessee had demonstrated that the cash found in his possession at the time of search, in fac t, belonged to some other person, the n no addition could be made in the hands of the assessee merely because he was found to be in possession of the impugned cash. The relevant extract o f the order passed by Hon'ble Kerala High Court is as under:
"32. Alternatively even assuming that mere fact of finding cash on the perso n of the assessee would give rise to the presumptio n and requiring us to conside r the consequent situation as to whether the material on reco rd provides proof o f rebuttal. The conclusion co uld no t be contrary to 52 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
the one reached by the two autho rities belo w, w he n not only tha t the re is no material to co nnect the assessee and his companio n with the cas h amo unt except t hat it was found on their pe rson. The mater ial on reco rd discussed hereinbefo re lea ve s no manner of doubt that the owne rship is trace able to other persons and not the assessee ir his companion in any manner . If the material on reco rd is bit suffic ient, any rebuttal of the presumption, the re c an be no other matter providing mater ial for rebuttal in re gar d thereto."
6.3 In view o f the above facts and ratio consistently laid down by Hon'ble Courts in the judicial decisio ns cited, the appellant submits that the addition of Rs.4,37,50,000/- made by the A.O. in the instant case so lely on the basis of the statement u/s 132(4), ignor ing the fact that the said statement has been subse quently retracted and the appellant has duly demons trated with substantiating evidence s that the impugned cash represents unaccounte d income of another person who has also offered it to tax as his undisclosed income in the return filed post search, is not justified on facts and in law.
Other reasons stated by the A. O. for re jecting the claim of the appellant are also not justified.
7. In the asstt. order, the second reason stated by the A.O. for rejecting the claim of the appellant is that the appellant has not furnished any documentary evidences to prove that Mr. Jai Saxena was looking after the operations of the appellant company at B angalore and the flat at 602, MB, Golden Grand Appt., Bangalore wherefrom the impugne d cash w as seized, was used by him for the purposes of the company. The appellant 53 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
submits that the above reason stated by the A.O. for rejecting the c laim of the appellant is no t justified. In this respect, it is to be noted that the details as to how Mr. Jai Saxena was assoc iated w ith the affairs of the appellant company were already furnished by the Director, Mr. Atul Mohan in his state ment dated 27.08.2015. In the said statement, Mr. Mohan had stated that Mr. Saxena was their family friend since past 15 years. It was stated that Mr. Saxena was engaged in software deve lopment business and real estate business since past few years. It was stated that in the year 2013, Mr. Saxena exited from the software business by selling off majority stake in Softw are Company promoted by him. It was s ubmitted that there after the appellant company had taken his advice for inves ting in properties and marketing of properties around Bangalore and Noida.
7.1] Subsequently, the statement of Mr. Jai Shiv Saxena was also recorded on 11.09.2015 post the survey ac tion u/s 133A conducted in this case . In the said statement, Mr. Saxena had state d that after 2013, he had incor porated a firm named Blackrock Pro jects and Investment which was engaged in the real estate business at Bangalore. In the said statement, he has further stated that Mr. Atul Mohan was his family friend s taying in New Delhi and hence, Mr. Saxena had suppor ted Mr. Mohan to expand the business of the appellant company in and around Bangalore region. Mr. Saxena has stated that his role was mainly limited to identification of properties for making inves tment. Mr. Saxena has also stated that the flat at 602, MB, Golde n Grand, Bangalore was used for official purposes of the appellant company and being the local guardian o f the appellant 54 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
company, it was in his custody since September 2014. In the said statement, Mr. Jai Saxena has further stated that the cash amounting to Rs.4.58 crores received by him on sale of shares of the company, EAFT Technologies Pvt. Ltd. was utilized by him in bits and pieces to make investment in the property identified for investment for the appellant company and also in his individual capacity. He has stated that cash of Rs .4,37,50,000/- found at the premises of the appellant company on 05.08 .2015 represented his unaccounted income from sale of shares e arned in 2014 which was subsequently investe d in bits and pie ces in property transactions relating to the appellant c ompany and in his individual capacity. It was stated that Mr . Saxena had identified a new Star t Up co mpany based in Bangalore for making investment and he needed cash for the said purposes in 2015 and hence, the cash investment made by Mr. Saxena was disinvested/ received back by him during the pe riod from May 2015 to July 2015. It was state d that the said c ash totaling to Rs.4,37,50,000/- belo nging to Mr. Saxena was found in the course of search action conducted on premises of the appellant company in August 2015.
7.2] The moo t point to be note d here is that in his state ment, Mr. Saxena had stated that he had also received return on the above cash investment made by him in the properties identified for investment for the appellant company. It was stated that as per the oral understanding with Mr. Atul Mohan, he used to get retur n on such investment at the average rate of 18-20% from the appellant company. He has stated that such r eturns are also included in the cash amount o f Rs.4,37,50,000/- belonging to him found during the course of search. Now, it is to be noted 55 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
that on the basis of such state ment given by Mr. Saxena, the A.O. i.e. DCIT, Central Circle -28, New Delhi who has also passed the asst, orders u/s 147 for A.Y. 2014-15 in the case of Mr. Jai Saxena has made the addition of Rs.38,95,800 /- as income derived from unaccounted investments made with PSK Finance Solutions Pvt. Ltd. i.e. the appellant company. The copy of the impugned asst, order in the case of Jai Shiv Saxe na for A.Y. 2014-15 is enclo sed herewith. Accordingly, the assessee submits that in the case of Mr. Jai Saxena, the Dept, has accepted the fact that Mr. Jai Shiv Saxena had business connection with the appellant company and that he had earned unac counted income of Rs.38,95,800/- in res pect^ of the inves tments made in cash with the appellant company and the Dept, has also levied tax in the hands of Mr. Saxena on the basis of the said stand. Therefore, the appellant submits that having taken this stand in the case of Mr. Jai Saxena, the Dept, cannot take a contrary stand in the case of the appellant company to hold that there was no business connection be tween appellant company and Mr. Jai Saxena. Ac cordingly, the assessee submits that the above reason stated by the A. O. for rejec ting the claim of the appellant is no t justified.
7.3] The assessee would like to raise a very per tinent iss ue to demo nstrate as to how the abo ve contention raised by the A.O. is apparently incorrect. In this regard, it is submitted that the A.O. has stated that the appellant has not proved the business connection be tween Mr. Jai Saxena and the appe llant company and therefore , the A.O . has presumed that the said cash seized from the premises of the appellant company cannot be said to be belonging to Mr. Saxena. At the outset, the as sessee submits 56 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
that the business connection between the appe llant company and Mr. Jai Saxena is already explained in view of the facts state d in paras 7.1 and 7.2 above. Even otherwise, it is submitted that had there been no connection between the appellant company and Mr. Jai Saxena, that is to say that, if the impugned cas h actually belonged to the appellant company and not to Mr. Jai Saxena as presumed by the A.O., then it is to be appreciated that in no scenario , the appellant c ompany would have left its c laim of ownership on such huge amo unt of ca sh. It is to be appreciated that if the cash had actually belonged to the appellant company, then it would have been cer tainly bene ficial for the appellant to admit the same as undis closed income and retain the balance quantum of cash after payment of taxes @ 30% on such cash. It is to be noted that in such a scenario, the appellant would have been liable to pay taxes @ 30% or the seized cash of Rs.4.37 crores, which would wo rk out to around Rs .1.31 crores whereas the appellant would have been able to retain its ownership on the balance quantum of cash of Rs. 3.06 crores, which is certainly a huge amount. Thus, it is to be appreciated that if the seized cash of Rs.4.37 crores was actually owned/ belonged to the appellant company, then there was no question of the appellant company relinquishing its right on the entire amount of cash just for the sake of avoiding payment of ta xes.
7.4] It is to be noted that in view of the constant assertions made by the appellant company before the Authorities without raising any objection to the claim of ownership of the impugned seize d cash ma by Mr . Jai Saxena, the appellant company has affirmed that it has r ight of ownership in the entire sum of 57 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
Rs.4.37 crore s found at the premises of the appe llant company. In view of the above facts, assessee submits that if the said cash of Rs.4.37 crores found at premises of the appellant company actually belonged to the appellant a nd not to Mr. Saxena, then the appe llant company would certainly not have left/ foregone its claim of ownership o n the entire amount of cash merely for the sake of avo iding payment of taxes thereon. In view of the above facts, it is reiterated that the second reason stated by the A.O. to presume that the seized cash belonged to the appellant company and not to Mr. Jai Saxena, is apparently incorrect on facts of the case. Hence , the assessee submits that the addition of Rs.4,37,50,000/ - made by the A.O. on the basis o f incorrect presumption is not justified at all.
8] The third and the last reason cited by the A.O . for rejec ting the claim of the appellant is that the appellant has not filed the confirmation from the person who has purc hased share s from Mr. Jai Sa xena, which has resulted into earning of unac counted cash income in the hands of Mr. Saxena. O n this basis, the A.O . has stated that the claim made by the appellant that Mr. Jai Saxena had infact earned such huge unaccounted cash income of Rs.4.37 crores which was found at the pre mises of the appellant company is not substantiated by proper evidence and hence, the same needs to be rejected. The appellant submits that the above reason stated by the A.O. for rejec ting the claim of the appellant is not justified on facts of the case. In this respect, it is to be noted that in the course of the consequential ^survey action u/s 133A conducte d on 10.09.2015 on the pre mises of Mr. Jai Saxena, the agreement and MOU date d 11.02.2012 evidencing transfer of shares by Mr. 58 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
Saxena to company owned by UK based business man, Mr. Arjun Vekaria was found and impounded. It is submitted that the fact that the share s were sold by Mr. Saxena to the said person is also evident from the Share transfer records available o n the MCA portal. Further, the said fact has also been admitted by Mr. Jai Saxena in his state ment recorded u/s 131 on 11.09.2015 by the Income Tax dept. The most important fact is that on the basis of the above declaration, the same A.O. i.e. DCIT, Central Circle 28, New Delhi has assessed the additional income o n sale of above shares totaling to aro und Rs. 6 crores (which inc ludes cash consideration of Rs.4.58 crores admitte d by Mr. Jai Saxena) as income from Mr. Jai Saxena in the asst. orders passed u/s 147 for A.Y. 2014-15 and 2013-14 in his case. Therefore, once the De pt. has accepted the above stand in the case of Mr. Ja i Saxena and has also recovered huge taxes from Mr. Jai Saxena on the basis of the above stand, the Dept, cannot take a contrary stand in the case of the appellant. It is submitted that such an action by the Dept. would amount to blowing hot and cold at the same time and the same would amount to vio lation of the principles of justice. In view of the above facts, the appellant submits that the third reason stated by the AO for rejecting the claim of the appellant is also not justified.
9] In view of the above facts and judicial decisions cited, the appellant submits that the addition of Rs.4,37,5 0,000/- made by the A.O. by treating the cash seized from the premises of the appellant company as unexplained inco me of the assessee on the basis of the statement u/s 132(4) is not justified and hence, it is prayed that the said addition may please be deleted.
59 ITA No. 663/Del/2021PSK Finance Solutions Pvt. Ltd.
In case, any further clarification is required, the same wo uld be submitted on hearing from Your Honour."
6. The observations of the ld. CIT(A ) are as under:
"8.1 A search action was carried out by the Economic Offe nce Wing CI D, Ba nga lore on the assesse e company at Bengaluru on 05.08.2015. At the time of the search, cas h amounting to Rs.4,37,50,000/- was seized. S ubse quently, searc h action u/s 132A was conduc ted on the premises of the PSK group on 08.08.2015. It has been submitted that the registered o ffice of the appellant company is located at New De lhi and all the directo rs of the s aid company are re siding in Ne w Delhi/ No ida. The premises o f the direc tors of the a ppellant company at Noida were also searche d. T he statement of the director o f the appellant company, Shri Atul Mohan was recorded u/s 132(4) on 20.08.2015 at his residential premises locate d at Noida, Uttar Pradesh. In the said statement, Mr . Mohan state d tha t the said cash was generated out o f unaccounted rea l estate trans actions carrie d out by the assessee co mpany in and around Bangalo re. It was further s tated that he was not in a position to produce any documenta ry evide nces to prove the abo ve rece ipts and hence, he agreed to o ffe r the said cash as undisc losed income in the hands of the assessee compa ny for A.Y. 2016-17.
8.2 Thereafter, on 27.08.2015, s ubse quent statement u/s 131 of Shri Atul Mohan was recorded at Bangalo re at the Office of DDIT (I nv.), Unit - 1(1), Bangalore. In the said statem ent, Shri Atul Mohan state d that the ca sh amounting to Rs. 4,37,50,000/- fo und at the premises o f the appe llant company at Bangalo re may have been kept by Shr i Ja i S hiv Saxena who was look ing after the operations of the appellant company in Bangalore and who w as also having the custody o f the flat a t 602MB, Go lden Grand, Bangalore from where the s aid c ash w as seized.60 ITA No. 663/Del/2021
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8.3 The appellant states that the operations of the appe llant company we re loo ked a fter mainly by Mr . Jai Shiv S axena, w ho was a family friend of the Directors of the appella nt company. Mr . Saxe na was engaged in the business of re al estate and he was base d in Bangalo re and hence, in view o f the fact that all the directors of the appe llant company were residing in Noida, the ope rations o f the appe llant company at Ba ngalore were looked afte r by Mr. Saxena. I t has been s ubmitte d that in the initial statement u/s 132(4) reco rde d at No ida, Mr. Atul Mohan ha d stated that the impugned cas h se ize d from the Banga lore premises of the appellant company w as generated out of real estate trans actions ca rrie d out by the appellant company. Further, on being asked rega rding the sources of cash seized from the B anga lore premises, Mr. Atul Mohan state d that he was not in a position to furnish any documentary evidences to pro ve the generation of the a bove cas h.
8.4 The appellant has further submitted that afte r vis iting Bangalo re, Mr . Atul Mohan ver ifie d the reco rds o f the appellant company and so ught the details and evidences regarding sources o f the cash se ize d from the Bangalo re premises from Shri Jai Shiv Saxena and found out that the entire cash o f Rs.4,37,50,000/- belonged to Mr. J ai Shiv Saxena. T hereafter, Shri Atul Mohan filed a lette r date d 04.09.2015 with the DDIT (Inv .), Unit - 1, Bangalo re clarifying that the impugne d cash found at the Bangalore premises of the appe llant co mpany belo nged to Shri J ai Shiv Saxena and the sources of ea rning the said cash by Mr. Saxe na we re also clarifie d in the s aid letter . It was stated that the above c ash was earne d by Mr. Saxena on sale of shares of a company and the said amount was no t offe red to tax by Mr. Saxena. Accordingly, it was state d that the impugne d c ash did not represe nt undisclosed income of the appe llant company but the same represented undisclosed inco me belonging to Mr. J ai Shiv Saxena.61 ITA No. 663/Del/2021
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8.5 A consequential surve y o peratio n u/s 133A of the Income Tax Act was co nducte d on the business premises o f Shri J ai Shiv Saxe na on 10.09.2015 a t Office No . 135, B Brigade Garden, Church Street, Bangalo re. During the co urse of the survey action, it was found that Mr. Saxena was looking after the operations of the appellant company a t Ba ngalore since the year 2013.It was further noticed that prior to 2013, Shri Saxe na w as a promoter and s hareholde r in a company named, M/s. EAFT Technologies Pvt. Ltd. w hich w as engaged in software deve lopment business. Dur ing the course of survey ac tion, an agreement date d 11.02.2012 entered be tween EAFT Technologies Pv t. Ltd., the Pr omoters (including Mr. Saxena) and an Inves tor company, M/s. Mesostrefia Ltd. owne d by one, Mr. Arjun K Vekaria , a UK based businessman, was found and impounded. An MOU entered between the above parties was also attache d to the said agreement and the said MOU w as a lso impounded. The said agreement and MOU contained details o f s ale o f shares o f EAFT Technologies Pvt. Ltd. exec uted by the promoters (including Mr. S axena) to the company o wned by Mr. Arjun Vekar ia.
8.6 During the course of the surve y proceedings u/s 133A, the statement of Shri Jai Shiv Saxe na was recorded u/s 131 on 11.09.2015 wherein he was questio ned regarding the sale o f shares made as per the above impounded agreement and whe ther the same was offere d to ta x by him . In his statement recorded o n oath, Mr. Jai Saxen a dmitted that he had received total cons ide ration of Rs . 6,25,97,924/- on sale of shares to Mr. Arjun V ekari a and his company during A.Y. 2013- 14 and 2014- 15. He stated that out of the said co nsider ation, Rs. 4,58,29,664/- was rece ived in cash whe reas the balance amo unt of Rs. 1,67,68,260/- was received through bank ing c hannel. Mr. Saxe na further stated that he was looking after the operatio ns of the appellant company at Bangalore and that the premises ow ned by the appellant company at Flat No .602 MB, Golden Grand, B angalo re was in his possession. In the said statement, Mr. 62 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
Saxena admitte d that the cash of Rs. 4,37,50,000/- se ized from the above premise s belonged to him and that the same was earned out of sale o f shares of EAFT Technologies Pvt. Ltd. w hich w as not offe red to tax by him."
The relevant parts of the said statement of Mr. Jai Saxena recorded u/s 131 of the Acton 11.09.2015 are as under:
" Q.1 3. A s p e r y ou r epl y t o Q .1 2 , yo u h a v e s ol d on l y 2 3 16 8 s ha r e s a s ag a i n s t y ou r h ol d i ng o f 3 ,3 6 , 00 0 s h a r e s . Pl ea s e sta t e w hat ha p p en ed t o t h e sh a r e h ol d i n g. Y ou a r e a l so r eq ui r e d t o fu rn i sh th e c om p l et e d eta i l s i n th i s r eg a r d.
An s .: S i r, a f t er t h e fi r s t sa l e o f2 31 6 8 sh a r e s , I h a v e s ol d ar ou n d 3 5 00 0 s ha r e s t o Sh ri Vi k ra m Bh a rg a v du ri ng 2 0 13 a t th e r at e of R s . 1 0 p e r sh a r e s t ot a l i n g t o R s .3 ,5 0 ,0 0 0/ - . Thi s sa l e w a s an i n di re c t c o mmi s si on t o M r. B h a r ga v wh e r ei n he ha s r e c ei ve d s h a r e w o rt h R s .36 3 .2 9 p e r sh a r e a t p ri c e o f onl y Rs . 10 per sha r e w i th an un d e r st a nd i ng as M r. Bh a rg a v was me d i a ti ng fo r s a l e o f c o mpa n y 's sha r e r s fr o m t h r e e d i r e ct o r s t o Mr . Ar ju n W a ka ri a f or v a l ua b l e c ons i d e ra t i on a s h e wa s cl o s e as s o ci a te o f M r . A rj un Va k a ri a . In fa c t s , a l l t he t hr e e o f u s h a v e s ol d t o M r . B ha rg a v 3 50 0 0 sha r e s ea c h a t R s . 1 0 p e r sh a r e.
F urt h e r , aft e r t hi s t ra n s a ct i on, I s ol d 5 5 56 7 s ha r e s a n d 92 6 10 s ha r e s t o M r. A rj u n V a ka ri a a t R s . 2 50 pe r s h a r es i n w h i c h th e r eal i sa ti on w a s a ro u n d R s .80 l a kh s t h r o u gh c h eq u e s a n d a r ou nd R s. 3 C r o r e i n c a s h . Th e e xa ct a m ou n t w hi ch I h a v e r e c ei ved i n c h eq u e s i s r efl e ct e d i n my b a n k s t a t em en t. Th e r ea son f o r s el l i n g a t t h e l es s e r pri c e w a s th a t I n e ed e d c a sh t o m y r e a l e s tat e v en tu r e. H e n c e th e d ea l wa s st ru ck f o r R s . 2 5 0 p e r s ha r e . F or th e s a i d tra n s a ct i ons , I h a v e a l s o n ot pa i d a n y c a pi tal g a i n ta x a s I w a s un d e r t h e i m pr e ss i on th a t t h e c a pi ta l gai n t ax wi l l n ot a tt ra c t on c e I h ol d th e sh a r e s f o r m o r e t h a n a y ea r . At pr e s ent 1 ,2 9 ,6 55 sh a r es a r e un d e r m y p os s e s si on .63 ITA No. 663/Del/2021
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Q .1 4 . I a m d ra w i ng y ou r a tt ent i on t ow a rd s t h e sh a r e h ol de r s ag r e em en t d a t ed 1 1 .0 2. 2 0 1 2 , n oti c e , s p e c i a l re s ol ut i on d a t ed 0 2. 0 3 .20 1 2 a n d a l s o y ou r a n s w e r t o Q . N o .1 1 , w h e r ei n i t i s n oti c ed th a t th e s h a r e p ri ce w a s fi x ed a t R s . 3 63 .2 9 p e r e q ui ty s ha r e an d y ou ha v e a l s o r e c ei v ed R s .8 4 ,1 6, 7 0 2 .7 2 /- b y w a y of c h eq u e/ ba n k t r a n sf e r . In th i s b a ckg r ou n d an d y ou r r e s p on s e to Q .N o .1 2 w h e r ei n y o u h a v e s ta t ed th a t y ou h a v e r e cei v ed ca sh al so f or t r an s f e r of s ha r e s. E xpl a i n w it h c r edi b l e do cu m e nt a ry e vi d en ce s t ha t y ou h a v e r e c ei v ed on l y R s . 25 0 /- p e r s ha r e f or s a l e of 1 48 1 77 eq u i t y s ha r e s to th e sa m e p e r so n M r. A rju n Va k a ri a wh o a l s o c on t r ol s M / s M e a ost r e fi a Li mi ted w hi c h ha d pu r cha sed y ou r sh a r e s a t R s . 3 6 3 .2 9 / - p e r sh a r e . In th i s r e g a r d w hy t h e sa m e p ri c e o f R s . 36 3 . 29 sh ou l d n o t b e a d op t ed a s sa l e pri c e f o r 1 4 81 7 7 e qu i ty s h a r es s ol d t o t h e s a m e p er s o n i n w hi c h c as h o f R s .4 , 5 8, 2 9 ,66 4 .3 3 / - w a s r e c ei ve d a s a g a i n st R s .3 c r or e ca sh wh i ch y o u ha v e s t a t ed i n t h e ea rl i er r ep l y.
* Rs . 4 ,5 8 ,2 9 , 66 4 .3 3/ - i s w o rk e d o u t a t R s .3 0 9 .29 p e r s h a r e [ Rs .36 3 . 2 9 m i n us R s. 5 4 (w hi ch w a s r e c ei v ed b y ch equ e ) ].
An s .: S i r , a s p e r t h e o ri gi n a l M oU r ef e r r ed b y y ou i t c a n b e s e en t h at t h e fi r s t s a l e pri c e th en w a s fi x ed on th e b a si s o f pe r fo rman c e o f th e c omp a n y a nd i t s fu t ur e ea rni ng s . As o f n o w , I n ot ab l e t o p r od uc e a n y c r e di bl e d o cu m en t a ry evi d en c e s i n s up p o rt o f m y c l a im th a t I h a v e r e c ei v ed on l y R s . 25 0 / - p e r s ha r e s w . r .t . sale. H en c e, I am v ol un t a ri l y o ff e ri ng R s.4 5 8, 2 9 ,66 ,4 3 3/ - w h i ch is r e c ei ved in c a sh and a l so R s.1 ,6 7 ,6 8 , 2 60 / - a s my u n di s cl o se d i nc om e fo r th e r e s p e c ti v e fi n an ci a l y e a r u n d e r th e h ea d ca p i t a l g a i n .
* cal cu l ati on f o r R s . 1 , 67 ,6 8 ,2 6 0 /- i s su m o f R s. 84 ,1 6 , 70 2 /- w hi c h w a s r e c ei v ed d uri n g fi r st s a l e o f 23 1 6 8 sh a r e s a n d R s 3 ,5 0 , 0 00 / - f o r s a l e o f 3 50 0 0 s h a r e s to Mr . V i k ra m Bh a r g a v a nd R s 8 0, 0 1 ,55 8 / f or s a l e o f 1 4 8 1 7 7 sh a r e s a t Rs .5 4 p e r s h a r e du ri ng se c on d s a l e t o M r . A rj u n V a ka ri a .64 ITA No. 663/Del/2021
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Q .2 0 . Do y ou kn ow co mp a n y by name M/ s PSK Fi n a nc e Sol u ti on s Pv t. Lt d . I f y e s, pl e a s e sta t e h o w y ou o r y ou r en t i t i es ar e r el a t ed t o i t .
An s .: Y e s, I kn o w M/ s P S L Fi n a n c e S o l ut i ons P vt . Lt d . b e i ng a fami l y fri en d o f M r . N a r e sh M oh a n a n d M r . A tu l M oh a n w h o s ta y ed i n N oi da , U. P. , I ca m e i n t ouc h w i th t hi s c o mp a n y fo r th e r ea l e st a t e bu s i n es s pu rp o s e s. A s th i s c omp a ny i s i n th e bu si n e s s of r ea l estate, Mr . Atu l Mohan a nd m y s el f j o i ned to g e t h er t o ex pa n d t h e r e a l e st a t e bu si n e s s i n NC R r e gi o n a s w el l as in a nd ar oun d B a n ga l o r e u nd e r M/ s PSK Fi na nc e Sol u ti on s Pv t . Ltd .
Q .2 1 . S i nc e h ow l o n g y ou a r e a ss o c i a t ed w i th M/s P S L Fi na nc e Sol u ti on s Pvt . Lt d . a n d f r om w hi c h p r e m i se of t h e s a i d c o m pa n y y ou a r e man a gi n g t h e op e ra t i on .
An s .: Si r, I h a v e s ta t ed e a rl i e r th a t i n t h e y e a r 2 0 13 I c a m e i nt o th e bu s i n e ss o f r ea l e st a t e . Du ri ng th i s pe ri o d onl y I ca m e i n cont a ct w i th a b o v e s a i d c omp a ny w i th th e vi ew o f ex pa n di n g i ts r eal es ta t e bu si n e ss in B a ng a l or e as I am residing in Ban g al o r e a nd w el l v e rs e d w i t h th e r ea l esta t e m a r k et t r e n d i n an d a ro un d Ba n ga l o r e . Wi th t he sa i d vi e w , M r . At ul M oh a n wh o l oo ks a ft e r a l l th e bu si n e ss a ff a i r s o f th i s c o mpa n y , sh ow n i nt er e st an d b el i ef on m e a s I a m h i s fa mi l y kn ow n f ri end , s ta rt e d e xp a nd i n g c om pa n y bu si n ess i n Ba n g a l o r e.
Si r, i n B ang a l o r e , c om p a n y ow n s a fl a t a t N o. 6 02 M B , G o l den G ran d, Y es w a n t h pu r , B a n ga l o r e w h i c h w e h a v e m a d e c o m pa n y' s o ffi c e t o c on t r ol Ba n g a l o r e b us i n es s a ff a i rs .
Q .2 7 . Pl e as e wh o a r e h a vi ng th e a cc e s s t o th e fl a t a t 6 0 2 MB , G ol den G r and , Y e s w a n t hp u r , Ba ng a l o r e w h i c h i s ow n ed b y M / s . PSK F i n a n c e S ol u ti o n s P vt . Ltd .
An s .: S i r , t h e k ey s o f fl a t a r e on l y w i t h m e a nd Mr . At ul M o h a n .65 ITA No. 663/Del/2021
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Q .2 8 . I am d ra w i n g y ou r a t t en ti on t o w a r d s t h e sei z ur e d o n e b y E con om i c Of f en c e D i vi si on , C I D, B a n ga l o r e du ri ng t h e c ou r s e o f s ea r ch at 6 0 2 M B , G ol d en G ra nd , Y e s w a n th p u r , B a ng a l or e on 0 5. 0 8 .20 1 5. Du ri n g t he s e a rc h t h e s a i d a ut h ori t y b a n s ei z ed a c a sh o f R s . 4 ,3 7 ,5 0 ,0 0 0/ - f r om sa i d p r emi s e . Pl ea s e st a t e w h o h as ke p t th i s c a sh a t sa i d p r e mi se a n d w h en .
An s .: Si r , I h a v e b e en u si n g th e p r em i s e si nc e S e p t em b e r 2 01 4 on w a rd s f o r da y t o da y op e ra ti on s o f P SK F i n a n c e S ol u ti on s P vt . Lt d . A s I wa s th e l o ca l c a r e t a k e r o f th e s a i d c om pa n y a nd a l s o I had an i n te rn a l u nd e r s ta n di n g be t w e en At ul M oh a n a nd Na r e sh M oh a n r eg a rd i ng th e com p a n y op e ra ti on i n a n d a r ou nd Ban g al o r e. I u s ed t o i d en ti f y a n d fi n a l i z e th e i n v es t m en t s i n pr op e rt i es i n a n d a r oun d B a n ga l o r e . A s s ta t ed a bo v e , I ha d r e c ei ve d c as h f r om s a l e o f m y s h a r es w h i c h I i n v es t ed i n PSK F i n an ce S ol ut i on s P vt . L t d. i n b i t s a nd p i ec e s o v e r a p e ri o d o f 2 y ea r s. In my p er s on a l ca p a c i ty also, I u s ed to i nv e s t in pr op e rt i es .
Th e sai d ca sh o f R . s. 4 ,3 7 ,5 0 , 0 00 / - w a s k ept by m ys el f i n th e ab ov e sa i d fl a t a n di ff e r en t occ a si on f r om M a y 20 1 5 to J ul y 2 01 5 . Th e s a i d m o n e y w a s r e cei v e d f ro m d i ff e r en t fi na n ci a l tra ns ac ti on s a n d p r op e rt i e s t r a n sa cti on s m a d e b y m y s el f a nd Mr . At u l M oh a n on b eha l f of PSK Fi na n c e S ol ut i ons P vt . Lt d.
Q .2 9 . K i nd l y el a b or a t e y ou r r e pl y gi v en t o Q. N o . 2 8, e xpl a i ni ng w h er e , wh en a nd h ow y ou h a v e m a d e t h e i n v es t m en t s i n PSK F i n an ce Sol ut i o n s P vt . Ltd . a n d a l s o fu rn i sh a g r e em en t /M o U i s mad e f o r y ou r i n v e s t m en t i n t h e sa i d co mp an y.
An s .: Si r , PSK F i n a n c e S ol u ti on s P vt. Lt d. i s cl o sel y h el d b y Mr . Na r e sh M oh a n a nd h i s fa m i l y me m b e r s . I kn o w t hi s fa m i l y fr o m l a st 1 5 y e a rs , h en c e t h e r e w a s no w ri tt en a g r e e m en t o r Mo U mad e b et w e en u s w . r.t . m y sa i d i n ve st men t , i n t hi s c o m p a n y . Ti ll t oda y I h a v e i n v es t ed a r ou n d Rs . 5 .5 0 c r o r e i n ca sh fro nt 2 01 2 . Ru t , th e r e w a s a n o ra l u nd e rs t a n d i n g m a d e w h e r e i n I w o u l d be g et ti ng 1 8% - 2 0 % o f r et u rn on m y i n ve st m en t f ro m 66 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
th e c om pan y. Th e r et u rn w a s a l so fi x e d a f t er ea ch t ra ns a c ti on mad e i . e . i f I g et th e cu st om e r i d en ti fy t h e l a nd a nd do th e gr oun d w o r k , m y r e tu rn w oul d i n cr ea s e up t o 22 %- 2 4 %. Bu t, i n c a s e s w h e r e A tu l di d t h e g r ou n d w or k , m y r etu rn w ou l d r e d uc e to 1 5 %- 1 6 %. S o, o n a n a v e ra g e m y r e tu rn w ou l d b e a r ou n d 1 8 to 20 % . Th e a b o v e s ai d c a s h i s a l s o i n cl u ded my r et u rn s on i nve stm ent .
Q .3 0 . K i n dl y e xpl a i n wh y s o m u ch o f ca sh ( R s. 4 ,3 7 ,5 0, 0 0 0/ -) w a s a c cu mu l a t e d f r om Ma y 20 1 5 t o Ju l y 2 01 5 ?
An s .: As I h a v e s ta t ed i n a b ov e r e p l y t h a t m y i n v e s tm en t s w er e mad e o v e r a p e ri od o f 2 y ea r s f ro m 2 0 12 t o 2 0 14 i n t h e s a i d c omp any . D u ri ng 2 0 1 5 A pri l , i t wa s d e ci d ed t h a t o v e r a p e ri od o f 6 m on th s I w ou l d t a k e b a c k my i nv es tm ent a l on gw i th m y r etu rn a s I h a d i d e nt i fi ed a st a rt up c o mp a n y w i th th e na me o f R eu n i on a Ba n g a l o r e based c o mp a n y for wh i ch I w ou l d b e r equ i ri n g t h e s a i d c a s h . H e n c e , t h e c a s h w a s a c cu mu l a t ed . Q .3 1 . I a m s h o w i n g y ou s ta t e m en t d a t ed 20 .0 8 .2 0 1 6 r e c o rd ed f ro m M r. A tu l M oh a n oi l oa th . Pl ea s e go t h r ou g h h i s r epl y t o Q .N o . 2 1 a n d 2 2 w h er e h e h a s gi ve n hi s exp l a n a t i on w i th r eg ar d t o s ei z u r e o f ca s h o f R s . 4 , 37 ,5 0 ,0 0 0 /- a nd st a t ed t ha t th e ca s h f ou nd a n d s ei z ed b el on g s t o com pa n y M/ s PSK F i na n c e Sol u ti on s Pv t . Ltd . P l ea s e gi v e y ou r c om men ts on i t .
An s .: S i r, i n m y e a r li er r e s p on s e s wh e r e I h a v e st a t ed th a t th e c a sh ha s b e en a c cu m ul a ted f o r a c q ui ri ng t h e st a rtu p c om p a n y.
Q .3 2 . Pl ea s e g i v e t he b r e a k -u p a n d d et a i l s o f i n ve s t m e nt o f R s.5 .5 0 C r o r e s a l on g w i t h th e s ou r c e s f o r th e s a m e .
An s . S i r , A s ea rl i er st a t ed I r e cei ve d a b ou t R s .6 .2 2 C r o r e s on ac c oun t of sa l e of s h a r e s i n t ota l , i n w h i ch R s. 1 .6 4 C r or e s w a s by wa y o f c h equ e s a n d t h e b a l a n c e of Rs .4 .58 C r o r e b y w a y o f c a sh . Ou t o f th i s I h a v e i nc u r r ed ex p en s e s f o r m y p e r s ona l dr a wi n gs et c. o f a b ou t R s .2 0 La kh s, I ha v e p l a c ed fi x d e p o si t o f R s.3 0 L a kh s a nd I ha v e p a i d t owa r ds do w n p a y m ent a n d l oa n 67 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
r ep ay m en t on m y c a r s t o th e tu n e of R s .2 0 L a kh s d u ri n g th e pe ri o d Ma y 20 1 2 t o Au gu s t 2 01 4 a n d a l so I ha d gi v en s om e pe r son al l oa n s th r o u gh ch eq u e t o s om e of m y f ri en d s f o r w h i ch I w o ul d fu rn i sh th e det a i l s s h o rtl y .
Q .3 3 . As p e r y ou r r ep l y t o Q .N o .32 , w h er ei n y ou h a v e st a t ed th at y ou h a v e pl a c ed a fi xe d d ep os i t o f R s . 3 0 L a khs . Pl ea s e gi ve th e d et a i l s o f ba n k a nd FD m a d e. A l so s ta t e th a t w h et h e r h av e y ou of f e r ed i n t e r e st i n c o m e e a r ned on sa i d F D . If y e s pl ea s e fu rn i s h t h e d et a i l s i n su p p or t o f th e sa m e .
An s .: Si r , th e sa i d F D h a s b e en pl a c ed i n C en t ra l B a n k of I n di a , Bri ga d e R oa d i n 20 1 3 . Th e d et a i l s w il l be fu rn i sh ed i n du e c ou rse . Si r, I d on ' t t hi n k t ha t I h a v e o ff e r ed i n te r e st i nc om e ea rn e d on sa i d FD . In c a se i t i s n ot d e cl a r ed , I w i l l d ecl a r e th e s a m e an d pa y t h e t a x a c co r d i n g l y.
A.3 4 . A s p e r y ou r r ep l y t o Q. N o . 2 9 , y ou h a v e s t a t ed t ha t y ou h av e r e c ei v ed a r ou n d 1 8- 2 0 % a s r et u rn on yo u r i n v e st m ent f or R s. 5 . 50 C r o r e , ki nd l y st a t e w h et h e r t h e sa i d r et u rn ha s be en o ff e r ed fo r t a x a ti o n . If n ot , why the same sh ou l d not be c a l cul at ed at 1 9 % n et of e xp en s es fo r F Y 2 01 2 -1 3 , 20 1 3 -1 4 a nd 2 01 4 - 1 5 .
An s .: Si r, I ha v e n o t off e r ed t h e r etu rn on i nv e s tm en t @ 19 % i n an y o f my i n c om e t a x r et ur ns . I h a d n ot u ti li z ed t hi s r etu rn on i nve stm ent f o r m y pe r s on a l u s e, a nd t h e r etu rn on i n v e s t m en t w a s r e- de p l o y ed i n th e c om pa n y i t sel f . K i nd l y gi ve m e 2 da y s ti m e t o w o rk ou t t h e sa m e y ea r w i s e a s I d i d n ot i n ve st fu l l R s.5 .5 0 C r or e s a t o n e g o , ra t h e r I ha d i n ve st ed t h e ca sh i n th e c omp any as a n d w h en I r e c ei ve d ca sh f r om sa l e o f my sh a r e s . I w o u l d de cl a r e th e s a m e i n m y r etu rn of i n c om e a nd pa y th e ta x e s a cc o r di n gl y."
7. After go ing through the details narrated above, the ld. CIT(A) held that Shri Jai Shiv Saxena voluntarily filed revised returns for A.Y. 2013-14 and 2014-15 on 68 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
29.07.2016 w herein the additional income on account of long term capital gains on sale of the a bove shares (including the undisclosed cash consideration of Rs.4,58,29,664/-) was offered to tax and since the cash found has been duly paid, the addition made in the hands of the company has been deleted.
8. For the sake of ready r eference, the ad judication of the ld. CIT(A ) is as under:
" ... ... . .I t i s su b m it t e d th a t t h e a s s e ss m ent o f Sh ri J a i S h i v S a x ena f o r A . Y. 2 01 3 - 1 4 and 2 0 14 - 15 w a s r e op en ed b y th e A . O . b y i s s ui ng n o ti c e u/ s 1 48 da t ed 3 1. 0 3 .20 1 8. Th e a s st , u / s 14 3( 3 ) r .w . s. 1 47 i n h i s ca s e fo r th e t w o y ea r s w a s co mpl e t e d o n 2 4 .1 2 . 2 01 8 . I n th e a ss es s m en t o rd e r s p a s s ed i n th e c as e of S h ri Ja i Sh i v S a x en a , t h e A. O . h a s a s ses s ed t h e l on g t e rm ca p i tal g a in s d e cla r ed b y S h ri Ja i S h i v Sa x en a (i n clu di n g th e un di s cl o s ed ca sh c on s id e r ati on o f R s .4 ,5 8 ,2 9 , 66 4 / - ) a s i nc o m e o f th e Sh ri S a x en a o n th e b a s i s of th e d e c la r a ti on gi v en b y Sh ri S a x en a in h is st a t e m en t dat e d 1 1. 0 9 .20 1 5. I t h a s be en p oin t e d out by t he a pp ell a nt th a t th e a b o v e as s e ss m en t o rd e r s in th e case of Ja i Shiv S a x ena w er e p a s sed on 2 4. 1 2 .20 1 8 w h e r e a s t h e a s s es s m ent o rd e r in th e ca s e o f th e a p p e l lan t c omp a ny wa s p a ss e d on 29 .1 2 .2 0 1 7 . T h e r e fo r e , th e fa ct t h a t t h e i mp ug n ed u nd is cl o s ed in c o m e on sa l e of sh a r e s ( w hi ch fo r m ed th e s o ur c e of th e c a s h s eiz ed a t th e p r e mi s e s o f th e a p p e l la n t c om p a n y ) h a d b e en a s s e ss e d t o ta x in th e h an ds o f Sh r i J a i Sh i v Sa x en a b y th e A . O . in h is a s se s sm en t , wa s n ot in t h e k n owl e dg e of th e A. O . of t h e a p p el l a n t c o mp a n y w h o p a s s ed th e as s e ss m en t or d e r o f th e a pp e ll a nt o f th i s y ea r u/ s 14 3 (3 ) o n 2 9 .1 2 . 20 1 7 .
8 .9 Th e app e ll a nt ha s c la i m ed th a t t h e i mp ug n ed c a sh f oun d w a s th e u nac c oun t e d i nc om e of M r . J a i S hi v Sa x en a a n d t h e s a m e di d n ot r e p r es en t th e u n a cc ou n t e d in c om e e a rn ed b y t h e a pp ell a n t c om p a n y . In t hi s r eg a rd , it h a s b e en s ub mi tt ed t ha t t h e in i ti a l d e cla r a ti on m a d e b y Mr . A tu l Mo ha n in t he st a t em ent d a t ed 2 0 .0 8 . 2 01 5 w a s gi v en w i th ou t f u ll k n owl e dg e o f fa ct s a n d n ot con s u lti n g th e r el e v a n t p e r s on i. e . Mr . J a i S hi v S a x en a w h o w a s l o o k in g a ft e r t h e op e ra ti on s of th e a pp ell a nt c o m pa n y i n Ba n ga l o r e . It 69 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
w a s fu rth e r s tat e d t h a t t h e s a id st a t e m en t w a s im me d ia t e l y r et r a c t ed vi d e let t er d at ed 0 4 . 09 . 2 01 5 fi l ed w it h th e D D I T ( I n v .) , Ba n g a l or e , w h e r e in i t w a s stat ed t h at th e i mp ug n ed c a sh r e p r e sen t ed u n a cc ou n t e d in c o m e of M r . J a i Sh i v S ax e na , e a rn e d b y hi m fr o m sa l e o f s h a r es a n d wa s n ot th e u nac c oun t e d in c o m e of t h e a p p el la n t c o m pa n y .
8 .1 0 Mr . S a x ena h a d o w ned u p t h e sa i d c a s h a n d h a d a d mi tt ed t h a t th e sa i d c ash r ep r e sen t ed hi s un a c c oun t ed i nc om e w hi ch w a s e a rn e d b y hi m on sa l e of s tak e/ sh a r e h ol d i ng o f a c om p a ny. An A g r e em ent a n d M OU dat ed 1 1. 0 2 .20 1 2 f or t ra n sf e r of sh a r eh o ldi n g by Mr. Sa x en a to UK b a s ed bu s in e s sm an w a s f o u n d a nd i m p ou nd ed in t he c ou rs e o f s u rv e y a c ti on u / s 1 33 A c on du ct ed on th e p r e mi s es of Mr . S a x en a . The a pp ell a n t ha s sub mi tt ed t h at t h e fa c t o f M r . S a x ena ha v in g ea rn e d u n a c c ou nt ed i n c om e on s a l e o f s h a r es w a s a l s o c o r ro b o ra t ed b y oth e r d o c u m en t a ry evi d en c e s li k e s ha r e t ran s f e r r e c or ds o bt a i n ed fr om M CA p o rt a l , ba nk s t a t em en t of Mr . S a x en a et c. Th e r e fo r e th e a pp el l a nt sta t e s th a t th e r e w a s n o r ea so n t o tr ea t th e sa i d ca sh a s u nd i s c l o s ed i n c o me o f t h e a pp ell a nt c omp a ny .
8 .1 1 Th e a pp ell a n t f u r t he r states th a t as a ga i n st th e s u b s t a n t iat in g e v id en ce s f ou n d a t t h e p r em i s e s of M r . S a x en a t o pr o v e th a t t h e im pu gn ed u nd is cl o s ed ca sh r ep r e s en t ed u na cc o u nt e d in c om e ea rn ed by him, no e v id en ce s, w ha ts o e v er , w e r e f oun d in th e c ou r se of t h e s ea r ch a c ti on a t th e p r e mi ses o f th e a p p ell a n t c o mp a n y t o in di c a t e t h a t t he a p p ell an t c omp a ny h a d e a rn e d t h e s a id u n a cc ou nt ed c a sh in c om e . I t w a s su b mi tt ed th a t th e ap p el lan t c om pa n y w a s in c o rp o ra t e d in A p ri l 2 0 1 2 a nd p ri o r t o th e da t e o f s ei z u r e o f c a s h i . e . 0 5 . 0 8 .2 0 1 5, t he a p p el la n t c o m pa n y ha d n ot s old an y im m o v a b l e pr op e rt y a n d th e r e f or e , i t w a s n ot p o s s ib l e t ha t th e app ell an t c o mp an y c ou ld ha v e e a r n ed su ch un d is cl o s ed i n c om e o f R s . 4 . 37 c r or e s f r om any ot he r s ou rc e . I n vi e w o f th e a b o v e fa ct s , t h e a p p ell an t sta t e d th at th e s e i z ed c a sh b el ong e d to M r . J a i S a xe n a a nd t h e s am e sh ou ld b e t r eat e d a s un d i s c l o s ed i n co me in t h e h a n ds o f th e a p p ell an t C o mp an y . Th e sai d a m ou n t wa s a l r ea d y o ffe r e d t o t a x a s a dd iti on a l i n c om e in th e han d s of M r. J a i S hi v S a x en a i n t h e r evi s ed r etu rn f il ed b y h im .
8 .1 2 Th e A . O . h a s ma i n l y re li ed u p on th e i ni tia l sta t em ent o f S hri At u l Mo h a n r ec o rd e d a t N ew D el h i on 2 0 . 0 8 .2 01 5 w h er e in h e ha d st a t ed t h at th e s aid ca s h s ei z e d f r om B a n ga l o r e p r em is e s o f t h e a p p el l a n t c om pan y 70 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
bel on g ed t o th e a p pel la n t c o m pa n y a n d t h e sa m e r ep r e s e nt ed un di s cl o s ed in c om e e arn e d f r om r ea l e s ta t e t r a n sa c t ion s . Sh ri A tu l M oh a n r et r a ct e d th e ab ov e s t at e m ent v i d e l ett e r da t ed 0 4 . 09 . 2 01 5 a d d r e ss e d to th e D D IT - In v e st ig ati on , Un it - 1 , B a ng a l o r e. Th e a pp el l a nt s ub mi t s t h a t t h e r el i an c e pl a c ed u p on b y th e A. O . on t h e sa i d st a te m en t, b y ign o ri ng t he s u b s equ ent r et ra ct i on , e xp l an a t ion & ev id en ces fu rni sh ed by th e a p p el la n t and adm i s si on ma d e by S hri J a i Sa x en a , w a s m i s pl a c e d.
8 .1 3 I t i s t o b e n ot ed th a t th e s a id fa ct wa s a l s o a cc e pt ed by M r . J ai Sa x en a w h o clai m e d th a t th e sa i d ca s h b el on g ed t o h i m. It i s su b mi tt e d th a t M r. Sa x en a h a d a ls o di s cl os e d t h e s ou r c e s t h r ou gh w h i c h h e ha d ea rn e d t h e im pu g n ed u n a c c ou n t e d ca sh . Th e su b st a nt i a t i ng e vi d en c e s i n sup p o rt of hi s clai m w e r e a ls o f ou n d in th e cou r s e o f con s e qu en ti a l s ur v e y pr o c e ed in g s u/ s 1 3 3A c on du c t e d by t h e D ep t , on th e p r em is e s of J a i Sa x en a on 1 0 . 09 .2 0 15 . M r S a x en a ha d sta t e d th a t h e w a s l o ok in g a ft e r th e op e ra ti on s o f th e a p p ell a n t c om p a n y in Ba n g a l o r e a n d w a s ha vi ng th e cu s t od y of the p r em i s e s at Flat N o. 6 02 M B, Go l d e n G r a nd A pp t . , Ba n g a l or e . In t h e s a i d s ta t e m en t , h e ha d ca t eg o ri ca l ly a dm itt ed t h a t th e ca sh of R s .4 ,3 7 , 5 0 , 00 0/ - s ei z e d f r om t h e sa i d p r em i s e s b el on g e d t o hi m an d t h e sa m e w a s s ou rc e d out of u n a cc ou n t ed in co m e e a rn ed b y w a y o f sa l e of st a k e/ s h a r e h old in g in a c o m pa n y w h er e in h e wa s a p r om ot e r . Th e sa i d un ac c oun t e d i n c om e by w a y o f ca s h se i z ed f r om th e p r em is e s o f th e app ell an t c om p an y w a s a l s o of f e r ed t o ta x b y M r . S a x en a by f il in g r e v i s ed r etu rn s . T h e A . O . h a s a s s es s ed un a c c o u nt e d in c o m e on sa le of sh a r e s t o th e tune of R s .5 , 3 8 , 31 ,2 2 2 / - and R s . 84 ,1 6 ,7 0 2/ - in the a s st , o rd e r s pa s s ed u / s 1 4 7 in t he c a s e o f M r . J a i Sh iv S a x en a f o r A . Y. 2 01 4 - 1 5 an d A.Y .2 0 1 3 - 14 r e sp e c ti v ely .
8 .1 4 It is a fa c t th a t t he a pp el l a nt c o m pa n y was in c o r p o ra t e d on 2 7. 0 4 .20 1 2. It is s u bm it t e d t ha t t il l t h e d a t e o f s e a rch i. e. 5t h Au gu s t 2 01 5 , th e a pp ell a nt c o mp a ny had not sol d an y im m ov a bl e p r op e rt y. F urt h e r , i n th e t o ta l in c o m e a s s ess ed by th e A . O . f o r e a r l ie r y ea r s i s a s f oll ow s - A. Y . 20 1 3- 1 4 : Loss (R s .36 ,2 40 / -) , A.Y. 2 0 14 -1 5 : Rs. 1 1, 1 4 ,30 0 /- [A.O. ha d made a dd it i on o f R s . 26 ,3 2 ,1 8 5 /- in r e sp e ct of de e m ed div i d en d ov e r a n d ab o v e Rs . 1 1 ,1 4 , 3 00 / -, w h ic h h a s b e en d el et ed by C IT (A )] , A .Y . 2 0 1 5 -1 6 : R s. 1 0 ,8 7 ,4 20 /- . Th u s , in vi ew o f t h e q u a nt um 71 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
o f in c o m e r etu rn e d by th e a pp el l a n t c om p a n y fo r t he e a rl i e r y ea r s a n d e s p e c ia l ly i n vi e w o f t h e f a ct th a t th e a p p el l a n t h a s n ot e nt e r ed in t o an y r ea l es tat e tr an s a c tion of s a l e o f im mo v a b l e p r op e rt y t il l th e d a t e o f s eiz u r e of c ash f r o m i ts i n ce p ti on , i t w a s i mp o s si b l e f o r t h e a p p ell a n t c omp a ny to h av e e a rn ed su ch u n a c c ou n t ed ca sh i n c om e of Rs. 4 ,3 7 , 5 0 ,0 0 0 /- fr o m a ny oth e r s ou r c es si n c e i t s in c o rp o ra t ion . Th u s, it i s sub mi tt ed t h at i n v i e w o f t h e a b o v e fa c t s , t h e i n iti a l a ss e rt ion m a d e b y M r. At u l M oh a n i n h i s s t a t em en t d a t ed 20 .0 8.2 0 15 w a s fa c t u a l l y in c o r r e ct .
8 .1 5 In th i s r eg a rd , th e a p p ell a n t h a s r eli ed u pon th e ra t i o l a id do w n b y H on 'bl e D el hi Hi gh Co ur t i n t h e c a s e o f C I T v. S u ni l Ag ga r wa l [ 3 79 I TR 3 67 ] ' w h e r ein i t h a s b e en h el d th a t w h e r e t he a s se s s e e h a d r et r a c t ed fr om th e ea rli e r d ecl a ra t ion g i v en b y h im in t h e st a t em e n t u /s 1 3 2( 4 ) by fu rn i sh in g a r ea s on a b l e e xp la n a ti on a n d su b st a n ti a ti ng e vi den ce in s u p p o rt of th e r et ra ct i on / su bs e q u en t c l a im , t h en in su c h ci r cum s ta n c e s, no add it i on can b e ma d e by t h e A. O . on th e b a si s o f th e st a t e m en t u / s 1 32 ( 4) o f t h e Ac t . Th e a p p ell a nt s u b m it s th a t i n th e i n st a nt c a s e , t h e r et ra ct i o n w a s m a d e b y t h e a pp ell a nt w it h in 1 5 da y s f r om r e co r di ng th e i ni ti a l sta t e m en t d a t ed 20 . 0 8. 20 1 5. Fu rth e r , t h e D i r e ct o r h a s ex pl a in e d t h a t th e in it ia l st at e m ent w a s r e c o rd ed a t N ew D elh i a n d b e f o r e r e c o rd in g th e sai d sta t e m en t , th e D i r e c t o r h a d n ot v e ri fi e d t h e r e c o rd s a n d h e h a d a l s o n ot c ons u lt ed/ obt ain ed p r op e r in f o r m a ti o n fr o m M r. J a i S a x ena , w h o w a s h a nd li ng th e o p e ra t ion s o f t h e a pp ell a n t c o m pa n y a t B a n ga l o r e fr o m th e fla t w h e r e fro m t h e i m pu gn ed ca s h w a s s ei z ed . T hu s, it w a s e xpl a in ed t h at th e i n iti al sta t e m en t w a s gi v en u nd e r c on fu s i on a nd m i s i nt e rp r et a ti on o f fa ct s . The D ir e ct o r exp la in e d t ha t on v isit in g Ba n g a l o r e , a ft e r p r op e r v er ifi c a t i on o f r e c o rd s a n d obt a in in g i n f o rm a ti on fr o m Mr . Ja i S a x en a , it w a s r e ali z e d t hat t h e sa i d c a sh f ou nd a t Ba n g a l o r e b el o ng ed t o M r. J a i Sa x en a an d it w a s not r e la t ed t o t h e o p e r a ti on o f t h e a pp ell a nt co mpa n y. F urt h e r , t h e app ell a n t a l s o e xp l a in ed th a t t h e a p p el la n t c o m pa n y h a d b e en in c o rp o rat e d on ly t h r e e y e a rs a go a nd on l y n o mi n a l i nc o m e w a s a ss e s s ed f or t h e ea rli e r t hr e e y ea r s a nd t h e re f o r e, in v i ew o f th e fa ct th a t th e app ell an t com p a ny ha d n ot s old a n y i m m ov a b l e pr o p e rty ti ll th e da t e o f s eiz u r e o f ca sh s in c e i t s i n c ep ti on, t h e r ef o r e it w a s im p o ss ib l e t h a t th e app ell an t c o m pan y c ou ld h a v e e a rn ed su ch u n a cc ou n t ed c a sh i n com e of R s .4 .3 7 c r o r e s s in c e its in c o rp o ra ti on . Th u s , th e a pp e l la n t su bs ta n ti at ed 72 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
th e f a c t th a t in iti a l dec la ra t i on m a d e b y i t w a s not co r r e ct . Th e a pp el l ant fu rt h e r su bm it s th a t t h e A .O . h a s n ot b r oug h t a n y c o r r ob o ra t i v e e vid en c e on r eco rd t o d i s p r o v e th e cl a im o f t h e a pp e ll a n t .
8 .1 6 Th e A. O . has s t a ted that the a p p el la n t ha d n ot fu rni sh ed a ny do cu m en t a r y e vid en c es t o p r o v e t ha t M r . Ja i S a x en a w a s l o ok in g a ft e r th e op e ra ti on s of th e a pp e ll a n t co mpa ny a t B a n g a l o r e a nd th e fl a t a t 60 2 , M B , G ol d en G r and A p pt . , B a n ga l o r e w h e r ef r om th e i m pu gn ed c a sh w a s s ei z ed , w a s u s ed b y h i m f o r t h e pu rp o s es o f t he co mpa ny . It i s s e en th a t th e det a il s a s t o h ow Mr . J a i S a x en a wa s a s s o ci a t e d w it h t h e a f fa i r s o f th e app ell an t c omp a ny w er e fu rni s h ed b y t h e D i r e ct o r , M r . A t ul M oha n i n h is sta t e m en t d at e d 2 7 .0 8 . 2 01 5 wherein M r. M oh a n had s ta t e d that M r. Sa x en a w a s t h ei r f a mi ly f ri end s i n c e pa s t 1 5 y e a r s . It wa s st a t e d th a t M r . Sa x en a w a s en ga g ed i n s o ft w a r e d e v el op m en t bu si n e ss a n d r ea l e s ta t e bu s in e s s si n ce pa s t f e w y e a rs . It wa s st a t ed t h a t in t h e y ea r 20 1 3, M r . Sa x en a e xi t ed fr om t he s o ft wa r e b u si n e ss b y s e ll in g o f f m a jo ri t y st a k e in s oft w a r e co mpa n y p r om ot e d b y h im . I t w a s sub m i tt ed t h a t th e r ea ft e r , th e app ell an t com p a n y ha d t a k en h i s a dv i c e f o r i n v e sti ng in p r op e rti e s a n d ma rk et in g o f p ro p e r ti e s a r ou n d B a ng a l o r e a nd No i da .
8 .1 7 Su b s eq u en t ly , th e s ta t em en t of M r. Ja i Sh iv Sa x en a was also r e c or d ed on 1 1 . 0 9 . 20 1 5 p os t t h e su rv e y a ct i on u /s 1 33 A c on du ct ed in th i s ca s e . In th e sa id st a t em ent , M r . S a x en a h a d st a t ed th a t a ft e r 2 0 1 3 , h e ha d in c o rp o rat e d a f i r m na m ed Bl a ck r ock Pr oj e ct s a nd In v e st m en t w hi c h w a s eng ag ed in t h e r e a l es ta t e b u si n e s s a t Ba n ga l o r e . In th e sa i d st a t em en t , h e ha s fu r t h e r st a t e d t h a t M r . At u l M oh a n wa s hi s f a mil y f r i en d s t a yin g i n N ew D el h i an d h en c e , M r. Sa x en a h a d su pp o rt e d M r. M oh a n t o e xpa nd th e bu s in e s s o f th e a p pel l a nt c om p a n y in a n d a r oun d Ba n g a lo r e r egi on . M r. Sa x en a h a s sta te d th a t hi s r ol e w a s m a in l y l i m it ed to ide n t i fic a t i on o f pr op e rt i es f o r mak i ng i nv e st m en t . M r . S a x en a h a s a l s o st a t ed th a t t h e fla t at 6 0 2 , M B , Go l d en G ra n d, B a ng a l o r e w a s u s ed f or o f fi c ia l pu rp o s e s of th e app ell an t c o mp an y a n d b e in g t h e l o ca l gu a r d ia n of t h e a p p el l a nt co mpa n y , it wa s in hi s cu st od y si n c e S ep t e m b e r 2 01 4 . I n th e sa i d st a t em en t , M r. J a i Sa x en a ha s f ur th e r st a t e d th a t th e c a sh a m oun ti n g t o R s .4 .5 8 c r o r es r e c eiv e d b y hi m on s a l e of s h a r es of th e c om p a n y, EA F T T e c hn ol ogi e s Pv t. Lt d . w a s ut i liz ed b y h i m i n pa rt s t o m a k e i nv e st me n t i n t h e p r op e rt i e s 73 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
id e nt i fi ed for i n v e s tm en t for the a p pel la n t c om p a n y and also in his in di v id ual c a p a ci t y . He h a s s ta t ed t h a t c a sh of R s . 4 ,3 7 ,5 0 ,00 0 /- f ou n d at th e p r emi se s o f t h e a p p el la n t co m p a ny on 0 5 .0 8 .2 0 1 5 r ep r e s en t ed hi s u nac c oun t e d i n c om e f ro m sa l e of s ha r e s e a rn e d in 2 0 14 which was sub s eq u en t ly in v es t ed in p a rt s i n p r o p e rt y t ra n sa c ti on s r el a ti ng t o t h e app ell an t c o m pan y a nd in h i s i n d i vi du a l ca pa ci t y . I t w a s s ta t ed th a t M r. Sa x en a h a d id en t if i ed a n e w St a rt U p c om p a n y b a s ed i n Ba n g a l o r e fo r ma k i ng i nv e st m en t a nd h e n e ed ed c a s h f o r t h e sa i d pu rp o s e s i n 2 01 5 an d h en c e , t h e ca sh i n v e s tm en t m a d e b y M r . Sa x en a w a s di s in v est e d/ r e c ei v e d ba c k by h i m du rin g th e p e ri od f r om Ma y 20 1 5 t o J ul y 2 01 5 . It w a s st a t e d th a t t h e s a id c a sh t ot a li ng t o R s . 4 ,3 7 ,50 ,0 0 0/ - b el on gi n g to M r . S a x en a w a s fo un d i n th e c ou r s e of s e a rc h a ct i on c on d uc t e d on p r em is e s o f th e app ell an t c o mp an y i n A ug u st 20 1 5 .
8 .1 8 Th e A. O . h a s s ta te d t ha t th e a p p el la n t h a s n ot fil e d t he c o n fi rm a t i o n f ro m th e p e r s on w h o h a s p u r ch a s ed sh a r e s f ro m M r . J a i S a x en a , w hi ch ha s r e s ul t ed i nt o e arn i n g of u n a c cou n t e d ca sh i nc o m e in t h e h a n ds o f M r. Sa x en a . O n t hi s b a s i s, t h e A . O. h a s s ta t ed th a t th e c l a i m m a d e b y th e app ell an t t h at M r . J a i S a x en a ha d in f a ct e a rn ed su c h h u g e un a c c oun t e d ca sh in co m e o f R s . 4.3 7 c r o r es wh i ch wa s f oun d a t t h e pr e m i ses of th e app ell an t c o m pan y w a s no t s u b s t a n t i a t ed b y p r op e r e vi d e nc e a n d h en c e , th e s am e w as t o b e r ej e c t e d . Th e a p p el l a nt su b m it s t h a t th e a b o v e r ea s o n sta t e d b y th e A . O. f o r r ej ec ti ng th e cl a i m o f t h e a pp el l a nt w a s n ot j u st i fi ed on f a c ts o f th e c as e . I n t h i s r es p ect , i t is t o b e n ot ed th a t i n th e c ou r s e o f th e c on s eq u e nt ia l s ur v ey a c ti on u/ s 1 3 3 A c on du c t ed on 1 0 .0 9 .2 0 15 on th e pr e mi ses o f Mr . J a i Sa x en a , th e a g r e em en t a n d M OU d a ted 11 .02 .2 0 12 e v id en cin g t ran s f e r of s h a r e s by M r. S a x en a t o c om pa n y o w n ed b y UK ba s e d bu sin e s sm a n , M r. A rju n V ek a ri a w a s f oun d a nd i mp oun d ed . It is sub mi tt ed th a t t h e fa ct t h a t th e sh a r e s w e r e s old b y M r . S a x en a t o th e sa i d p e r son w as a l s o e v i d en t f r om th e S ha r e t ra n s f e r r ec o rd s a va il a b l e o n th e M C A p o rta l . F u r t he r , th e sa i d fa c t h a s a l s o b e en a d mi tt e d by M r . J a i Sa x en a i n h i s st a t e m en t r e c o rd ed u /s 1 3 1 on 1 1 .0 9 . 2 01 5 . It i s a f a ct i s th a t on t h e b as i s o f th e a b o v e d e cl a ra t i on , th e sa m e A . O. i . e. D C IT , C ent ral C i r c l e 2 8 , N e w D elh i h a s a s s es s ed t h e a d di ti ona l in c om e o n sa l e of ab ov e , sh a re s t ot a l in g to a r ou n d R s .6 crores ( wh i ch in clu d e s c a sh c ons i d e rat i o n o f R s. 4 .5 8 c r . a dm it t ed b y M r. J a i S a x en a ) a s in c o m e o f M r .74 ITA No. 663/Del/2021
PSK Finance Solutions Pvt. Ltd.
J a i S a x en a in th e a s s t, o r d e rs p a s s ed u /s 1 47 f o r A . Y. 2 0 1 4- 15 a n d 20 1 3- 1 4 i n hi s ca se.
8 .1 9 Th e app el l a n t h a s su b mi tt ed t h a t t h e i mp ug n ed ca s h wa s ea rn e d by Mr . J ai S a x en a i n t h e m on th s o f J u n e a nd Ju ly , 2 01 3 i. e . d uri ng A. Y .20 1 4- 15 by way of sale of his sh a r e h o l d in g in th e com p a n y , M/ s . E AF T T ech no l og i e s I n di a Pvt . Ltd . , B a ng a l or e t o a UK b a s e d b u si n e ss ma n , M r . Arj an V ek a ri a. M r . S a x en a h a d e a rn ed t ot a l un di s cl o s ed c a sh c on si d e rat i on o f R s. 4 , 58 ,2 9 ,6 6 4 / - on s a l e of th e s e s h a r e s d u r in g A .Y .2 0 14 -1 5 a nd ou t of th e s a m e , th e ca s h t o t h e tu n e o f R s .4 , 3 7 , 50 ,0 0 0/ - wa s k e pt by h i m i n th e ab ov e fl at ow n ed by th e a p p ell a n t c om pa n y. It is s e en fro m th e sub mi s si on s t h at d u rin g A .Y .2 0 14 - 15 , M r . Sa x en a h a d s ol d 5 5 ,5 6 7 sh a r es to Mr . V ek a ria on 0 2.0 6 . 20 1 3 a n d 9 2 , 6 1 0 sh a r es on 0 9. 0 7 .20 1 3 , t ota l n o . o f sh a r e s s o ld b e in g 14 8 ,1 77 . T he s e sh a r e s w e r e s ol d @ R s .36 3 . 29 /- p e r sha r e a nd th u s , t h e t ot a l s a l e c on sid e ra t i on r ece i v ed b y Mr . S a x ena w a s R s . 5 ,38 ,3 1 , 22 2 / - . Out o f th e sa m e , c on s id e ra t i on w o r k ed ou t @ R s .5 4 /- pe r s h a r e i. e . R s. 8 0 ,0 1 , 5 58 / - w a s r e c e i v ed b y M r. S a x en a t hr oug h b a nk i ng cha n n e l w h e r ea s the balance c on si d e ra t i on of Rs. 4 ,5 8 ,2 9, 6 6 4/ - was r e c eiv e d i n ca s h .
8 .2 0 I n t hi s r eg a rd , r ef e r en c e h a s b e en m a d e t o re pl y t o Q .1 3 & 1 4 o f sta t e m en t u/ s 1 31 o f M r. J a i Sa x en a da t ed 1 1 .0 9. 2 0 1 5 . Up on p e ru sa l o f th e r ep li es giv en b y Mr . S a x en a t o Q . 1 3 8 b 1 4 o f th e sa i d sta t e m ent , it i s n oti c ed th at M r . S a x ena a d m i tt ed t ha t h e h a d t r an s f e r r ed t ot a l o f 14 8 , 1 77 sha r e s [ 5 55 6 7 + 9 2 6 1 0] t o M r . V ek a ria in A .Y . 1 4- 1 5 a g a i n st w h i c h h e h a d r e c eiv e d t otal s a l e c on s i d e ra t i on o f R s . 5,3 8 , 31 ,2 22 / -. He fu rt h e r a d mi tt e d th a t ou t of th e s a m e, c ons i d e ra t i on of Rs .8 0, 01 ,5 5 8 / - was r e c ei v ed th r ou gh b an ki ng c h a nn el wh e r e a s the bal a n c e c ons id e ra t i on of R s .4 ,5 8 ,2 9 , 6 64 / -w a s r e c ei v ed in c a s h .
8 .2 1 I n R epl y t o Q . N o s . 2 0 , 2 1 , 2 7 t o 3 1 8 B 34 o f hi s s t a t em e n t u/ s 1 3 1 da t ed 1 1 . 09 . 2 01 5 , Mr . Ja i Sa x en a has a d mi t t ed that th e c a sh of R s .4 ,3 7 ,5 0 , 0 00 / - se i ze d f r o m th e fl a t a t Ba n g a l o r e ow n e d b y th e com pan y , M/ s. PSK Fi n an c e Sol u t i on s P vt . Ltd . on 0 5 .0 8 .20 1 5 b e lon g e d t o h i m, cla ri fi e d th e r e as o n s d u e t o w h ich th e sa i d c a sh b el ong in g to hi m w a s k ep t by hi m in t h e im p u gn e d pr e m i s es b el on gi n g t o P SK C o m pa n y a n d al s o e xpl a in ed th e s ou r c e o f th e sa i d c a s h o f R s. 4 . 3 7 C r s. b el ong in g t o h i m 75 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
w hi c h w as s ei z ed in Au gu s t, 20 1 5, by w a y o f cl a r i f yi ng th a t th e sa i d c a s h w a s s ou rc e d ou t of t he u nd i s c l o s ed c a s h c on si d e r a ti on o f R s. 4, 5 8 ,29 ,6 64 / - r e c eiv e d b y h i m on s a l e o f sha r e s o f EAF T C om pa n y ma d e to M r . A rj un Vek a ri a .
F urt h e r , in r ep li e s t o th e a b o v e q u e st i on s , M r. S a x en a h a s a l s o di sc l os e d th e d e t a il s r eg a r d i n g t r a il of t h e s a i d u nd i sc lo s ed ca s h of R s .4 .5 8 C r s . f ro m th e dat e o f it s r e c ei pt up on s a l e o f sh a r e s up t o t h e da t e of it s se i zu r e on 0 5. 0 8 .20 1 5 . In t he s e r ep li e s , M r . S a x ena h a s di sc l os e d t h e d e t a il s as t o w h er e t h e s aid u n dis c l o s ed ca sh c on s ide r a ti on o f Rs .4 .5 8 C rs. r e ed , on sa l e of s h a r es w a s in v e s t ed b y h im du ri ng t h e p er i od f r o m 2 0 13 t o 2 0 1 5 an d h o w t h e s ai d c a sh w a s a va i la b l e w i t h hi m in Au gu st , 2 0 15 .
8 .2 2 On t h e b a s i s o f t h e sa i d r e pl y a n d a ft e r p e ru si ng t h e r el e va n t r e c or ds , t h e A. O . in t he c a s e o f M r . J a i S a x en a h a s m a d e t he a dd i t i on of R s . 5 ,38 ,3 1 , 22 2 / - t ow a rd s u nd is c l o s ed in c om e on s a l e o f s h a r e s i n pa r a 6 , sub p a ra ( ii ) on pa ge 2 1 of th e a s s e s s m en t o rd e r u/ s 1 47 pa s s ed fo r A . Y 2 01 4 -- 15 in c a s e of M r. J a i Sa x en a . I t ma y n o t ed t ha t th e t ot a l s al e c ons i d e rat i o n r ec e i v ed b y M r . J a i Sa x e n a u p on sa l e o f sh a r eh ol di ng mad e to Mr . A rj a n V eka ri a a nd h i s co m p a n y d uri n g A . Y . 20 1 3- 1 4 a nd 2 0 14 - 15 w a s R s. 6 , 25 , 9 7 ,9 2 4 /- . Ou t of t h e s a m e , R s. 1 ,6 7, 6 8 ,26 0 / - w a s r e c ei v ed th r ou gh b an k in g c h a n n el w h e r ea s ba l a n ce co ns id e r a ti on of R s .4 ,5 8 ,2 9 , 6 64 / - w a s r e c ei v ed in c a s h d ur i n g J u n e a n d Ju ly , 2 01 3 a s cla ri fi e d ab o v e . Th e en ti r e s a l e c on si d e ra t i on o f R s . 6 ,25 ,9 7,9 2 4/ - r e cei v ed by M r . Ja i S a x en a w a s u nd i s c l o s ed i n th e o rig in a l I T R s fi l e d be f or e su rv e y . Ac c o rd in gl y , th e en t ir e s a l e c ons id e ra t ion h a s b e en t a x e d by t h e A . O . o f Mr . J a i Sax en a a s un di s cl o s ed i n c om e i n hi s ha n d s by m a k in g a d d iti on of R s . 84 ,1 6 , 70 2 / - i n t he a s s e s sm en t o rd e r u / s 14 7 p a s s ed fo r A .Y . 2 0 1 3- 1 4 an d a ddi t i on s o f Rs . 5, 3 8 ,31 ,2 2 2 / - a nd Rs. 3 ,5 0 ,0 0 0/ - in th e a s s es sm ent o rd e r u/ s 1 4 7 p a s s e d i n ca s e o f M r . Sa x en a f o r A . Y . 2 0 14 - 1 5.
8 .2 3 As d i scu s s ed a b o v e , M r. J a i Sa x en a a dmi t t ed th a t th e un di s cl o s ed ca sh c on si d er ati on o f R s . 4 .58 C r s . r e c ei v ed b y hi m a r oK G a ds du n e & J u ly , 2 01 3 u p on sa l e o f s h a r e s of EA F T C o . , w a s in v e st ed b y h im in b it s an d pi e c e s o v e r a p e r io d u pt o 2 0 14 i nt o r e a l e s t a t e tr a n s a c t i o ns t hr ou g h PSK C o mp an y . M r . Jai S a x en a h a s fu rth e r a dm it t ed t o h a v e r e c ei v ed r etu rn o n su c h ca sh in v e s t m e nt s ma d e in r e a l e s t a t e t r a n s a ct i o n s o v e r t h e r el e v an t 76 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
pe ri o d of a r oun d t w o y ea r s. M r . J a i S a x en a ha s a l s o a d mi tt ed th a t in Ap ri l, 2 01 5 , he had id e n ti fi e d a B a ng a l or e based s ta rt up c om p a n y n a m ed 'R en ui on ' f o r in v e s tm ent a n d h e n e ed ed t h e i mp u g n ed c a sh f o r ma ki n g in v e s tm ent i n t h e s a id c omp a n y . T h e r e for e , d ur i ng A p r il 2 01 5 , h e d e cid e d to w it hd r a w t h e ca s h i nv e s tm en ts m a de in r e a l e sta t e t ra n sa c t io n s th r ou g h PSK o v er a p e ri od o f n ex t s ix m on t h s i n o rd e r t o i nv e st th e s a i d p r o c e ed s in t o t h e n ew s t a rtu p v en tu r e. A cc o rd i n gl y , i n th e m on th s o f-M a y t o Ju ly , 2 01 5 , M r . J ai S a x e n a h a d a cc u mu la t e d ca sh o f R s . 4 , 3 7 ,50 ,0 00 / - fr o m w it hd r aw a l of th e im pu g n ed ca sh i nv es tm en t s made in r ea l e s t at e tra ns ac ti on s t h r oug h PSK a nd th e s a i d ca sh w a s k e p t b y M r . J a i S a x en a a t th e s ea r ch ed p r e mi s es i . e . fl a t a t 60 2 MB , G o ld en G ra n d , B a n ga l o r e . In th i s r e ga rd , M r. Ja i S a x ena h a d a l so c l a ri fi e d t h at th e s a i d fl a t w a s i n h i s cu s t od y s in c e S ept em b e r, 20 1 4 in the ca p a ci t y of local gu a r d ia n at Ba n g a l or e l o ok i ng a ft e r r e a l e s t a t e o p e r a ti on s o f PS K c omp a ny a r oun d d o r e sin c e al l th e di r e c t o r s o f th e c om p a n y w e r e b a s ed in N oi da .
8 .2 4 In vi e w o f th e a b ov e f a ct s a nd ju di ci a l d e ci si on s cit e d, 't h e a dd i t i on o f R s. 4, 3 7 ,50 ,0 0 0/ - ma d e b y t h e A . O . b y t r ea t i ng t h e ca s h s eiz ed f r om th e pr e mi ses o f t h e ap p el l a n t c om p a ny a s u ne xp l a i n ed in c om e o f th e a ss e s s e e on t he b a si s of th e s t a t em en t u/ s 1 32 ( 4) is u n j us t ifi ed . Th e sa i d u ne xp l a i n ed in c o m e , a s d e t a il e d a b o v e h a s b e en a c c ep t ed a s t h e a d di ti on al in c om e b y M r . J a i S a x ena a n d th e s a id a m ou n t h a s b e en a s s es s ed u / s 1 4 7 f or A .Y . 2 0 1 4 - 1 5 . F urt h e r i t i s s e en t ha t M r. J a i S a x e n a h a s o pt ed f o r Vi va d S e V i sh w as S c h em e 2 02 0 r eg a r di n g t h e a pp ea l p end in g a g a i n st th e sa i d a ss e s sm en t o r de r u / s 1 4 7 fo r t h e a s s e ss m ent ye a r 2 0 14 -1 5 , h a s pai d th e du e ta x es a nd h a s wi th d r a wn th e a pp e a l in hi s ca s e fo r t h e A .Y . 2 01 4- 1 5. It is h e ld on th e b a si s o f th e d et a i l e d d is c u s s i on a b o v e a n d t h e f a c t s o f th e ca s e t ha t t h e s a id c a sh s ei z ed of R s . 4 ,37 ,5 0 ,0 0 0/ - b el on g s t o M r . Ja i Sa x en a f or the a s s es s m en t y ea r 2 0 1 4 - 15 , and n ot of t he a pp e ll ant . Ac c o rd in gl y , t he sa i d a dd it i on of R s . 4 , 37 , 5 0 ,00 0 /- m a d e i n th e h a nd s o f th e a pp ell ant i s h e r eb y d el et ed . Th e a p pel la n t g et s r el i e f o n th e s e gr ou n d s o f app ea l.77 ITA No. 663/Del/2021
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9. Before us, the ld. DR relied on the order of the Assessing Officer and the ld . AR, on the ord er of the ld. CIT(A).
10. Heard the arguments of both the parties and perused the material available on record. It is observ ed that, The a ppellant is a domestic company.
A se arch action was carried out by the Economic Offence Wing of CID, Bangalore on the 05.08.2015 on the assessee group.
An amount of Rs.4,37,50,000/- found during the search in the premises of the company.
The Assessing Officer made addition o f the ca sh found during the search of Rs.4,37,50 ,000/- in the hands of the assessee.
The basis of the addition was the state ment rec orded on oath u/s 132(4) of Sh. Atul Mohan, Director of the company on 20.08.2015 where in he sta ted that the cash belongs to the company and not accounted. The AO held that the state ment was reaffirmed on 27 .08.2015. A survey u/s 133A was conducte d on the business premise s of Sh. Jai Shiv Saxena on 10.09 .2015.
Statement recorded u/s 131, Sh. Saxena admitted that he has received total co nsideration of Rs.6,25,97,924/- on sale of shares.
Sh. Saxena admitted that he is the promoter and share holder in the company named EAFT Technologies Pvt. Ltd. and the said shares were sold to Mr. Arjun Vakaria a 78 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
U.K. based businessman who is the owner of the investor company namely M/s Mesostrefia Ltd.
Sh. Saxena a dmitted in the statement recorded u/s 131 that out of the total consideration of Rs .6,25,97 ,924/- for sale of shares an amount of Rs.4,58,29,664/- was received by him in cash.
Sh. Saxena a dmitted in the statement recorded u/s 131 that he was looking after the operations of the assessee company and the premises owned by the assessee company was in his possession.
The case of Sh. Saxena was reopened u/s 148 for A.Y . 2013-14 and A.Y. 2014-15.
The revenue authorities, base d on his statement, have assessed the long ter m capital gains including the cash found of Rs.4,58,29,664/- in the hands of Sh. Jai Shiv Saxena vide order date d 24.12.2018.
The Assessme nt Order in the case of the asse ssee was passed on 29.12.2017 assessing the same cash of Rs.4,58,29,664/-.
The cash found was owned and assesse d in the hands of Sh. Jai Shiv Saxena and also in the hands of the assessee company.
Sh. Jain Shiv Saxena has also paid due taxes. Thus, the taxes on the cash found have been duly recovered by the revenue authorities.
The ld. CIT(A) has deleted the addition made in the hands of the assessee on the grounds that the said c ash found has been accepted as additional income by Sh. Jai Shiv Saxena and the said amount has been duly assessed u/s 147 for A.Y. 2014-15 and also due taxes have alre ady been 79 ITA No. 663/Del/2021 PSK Finance Solutions Pvt. Ltd.
paid by Sh. Jai Shiv Saxena. Hence, assessing the same income in the hands o f the assessee co mpany again leads to double taxation of the same cash found and seized. Ergo, we hold that no infraction in the order of the ld. CIT(A) could be established and hence we decline to inter fere with the reaso ned order of the ld. CIT(A).
11. In the re sult, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 15/05/202 4.
Sd/- Sd/-
(Kul Bharat) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 15/05/2024
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR