Income Tax Appellate Tribunal - Raipur
Deputy Commissioner Of Income Tax, ... vs Shri Mukesh Kumar Agrawal, Raigarh on 16 August, 2024
आयकर अपीलीय अिधकरण, रायपु र ायपीठ, रायपुर
IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR
ी रिवश सूद, ाियक सद एवं ी अ ण खोड़िपया, लेखा सद के सम ।
BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
(ITA No's: 108/RPR/2020, 06/RPR/2021, 07/RPR/2021)
(Assessment Year: 2018-19)
Sr. ITA No's Appellant Respondent
no
01 108/RPR/2020 DCIT (Central-2), Shri Sanjay Agrawal,
Raipur House No.-069, Dhimrapur, Bypass
Road, Friends Colony, Raigarh,
Pin: 496001
PAN: ACIPA2389J
02 06/RPR/2021 DCIT (Central-2), Shri Mukesh Kumar Agrawal,
Raipur Gauri Shankar Mandir Road,
Nayaganj, Raigarh (C.G.),
Pin: 496001
PAN: ACIPA0564F
03 07/RPR/2021 DCIT (Central-2), Shri Rajesh Kumar Agrawal,
Raipur Prop: M/s Shri Balaji Rice Mill, Gauri
Shankar Mandir Road, Nayaganj,
Raigarh, (C.G.)-496001
PAN: ACIPA0698Q
Cross Objection Nos. 1, 2 & 3/RPR/2021
(Assessment Year: 2018-19)
Arising out of ITA Nos. 108/RPR/2020, 06/RPR/21, 07/RPR/2021
Sr. CO No's (Arising Appellant Respondent
no Out of ITA)
01 01/RPR/2021 Shri Sanjay Agrawal, DCIT (Central-2),
(108/RPR/2020) House No.-069, Dhimrapur, Bypass Raipur
Road, Friends Colony, Raigarh,
Pin: 496001
2
ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
PAN: ACIPA2389J
02 02/RPR/2021 Shri Mukesh Kumar Agrawal, DCIT (Central-2),
(06/RPR/2021) Gauri Shankar Mandir Road, Raipur
Nayaganj, Raigarh (C.G.),
Pin: 496001
PAN: ACIPA0564F
03 03/RPR/2021 Shri Rajesh Kumar Agrawal, DCIT (Central-2),
(07/RPR/2021) Prop: M/s Shri Balaji Rice Mill, Raipur
Gauri Shankar Mandir Road,
Nayaganj,
Raigarh, (C.G.)-496001
PAN: ACIPA0698Q
िनधा रती की ओर से /Assessee by : Shri Sunil Kumar Agrawal & Vimal
Kumar Agrawal, CA's
राज की ओर से / Revenue by : Shri S. L. Anuragi, CIT-DR
सुनवाई की तारीख / Date of Hearing : 02.07.2024
घोषणा की तारीख /Date of Pronouncement : 16.08.2024
आदे श / O R D E R
Per Arun Khodpia, AM:
The captioned appeals are filed by the revenue and the cross objections by the assessees against the separate orders of Commissioner of Income Tax (Appeals)-3, Bhopal, (in short "Ld. CIT(A)"), for the Assessment Year 2018-19 dated 13.10.2020 / 31.12.2020, which in turn arises from the orders U/s 143(3) 3 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal r.w.s. 153A of the Income Tax Act, 1961 (in short "The Act"), passed separately by Deputy Commissioner of Income Tax, Circle-2, Raipur (in short "Ld. AO"), dated 20.12.2019 / 27.12.2019.
2. All the aforesaid matter pertains to various assessees of M/s NR Group & M/s Seleno Group, wherein search & seizure u/s 132 of the Act was conducted concurrently on 24.10.2017 in their business and residential premises. The assessees in present case are key persons and Directors in the aforesaid groups, known as Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal. Since the issues involved herein are common, interconnected and inextricably interwoven, therefore, for the sake of convenience and brevity, all the aforesaid matter are taken up for adjudication under this common order.
3. ITA No.108/RPR/2020 has been taken up for adjudication first as the lead case, our decision therein shall have a direct bearing on the issues in the other cases and, therefore, the outcome of the lead case shall be utilized to decide the remaining matters by applying the same mutatis mutandis.
4. Ground of appeal raised by the department in ITA No. 108/RPR/2020 is extracted as under:
4 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
1. "On the facts and int he circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 2,10,00,000/- made by the Assessing Officer on account of unexplained investment u/s 69 of the Income Tax Act, 1961.
4.1 The brief facts of the case are that the assessee is an individual, who had derived income from house property, business of steel trading and income from other sources during the relevant AY. A search & seizure operation u/s 132 of the Act was carried out on 24.10.2017 on the business / residential premises of the assessee and other concerns / business associates. Return of income (ROI) u/s 139(1) for AY 2018- 19 was filed on 31.08.2018, declaring total income of Rs.34,60,410/-. During the course of search, incriminating document in the form of "Sauda-Ikrarnama"
agreement to sale was found and seized from the premises of M/s NR Ispat & Power Pvt. Ltd., Raigarh, wherein the assessee is a director. A query was raised by the Ld. AO during the assessment proceedings u/s 143(3) r.w.s. 153A qua the transactions emanating from the said agreement. In response to the said query assessee submitted that, the piece of loose paper which is an undated, unsigned and proposed draft agreement titled "Sauda-Ikrarnama" found from the premises of M/s NR Ispat & Power Pvt. Ltd., in fact was kept ready unilateral (without the knowledge of Mr. Rajesh Agrawal & Mukesh Agrawal, the sellers mentioned in the said document). As per assessee this document was prepared for negotiations/ discussing about the deal of acquiring possession of plant & other assets owned by M/s Seleno Steels Ltd.
(now M/s NRVS Steel Ltd.). Assessee contended before the Ld. AO that this was 5 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal only the offer/ proposal, unilaterally prepared by the assessee without the knowledge of the sellers. It was the submission of assessee before the Ld. AO that the document seized does not have any evidentiary value, because it was neither executed nor it was signed by anyone even it was not witnessed, no date of execution was mentioned, there was cuttings and corrections at many places, there are interpolation by hand over the typed matter. In statement u/s 132(4) recorded on oath of Mr. Rajesh Agrawal, director of Seleno Steel, when confronted with the alleged document, have denied to recognise and to have any knowledge of any such document which was not signed by him or his brother Shri Mukesh Agrawal. Mr. Rajesh Agrawal have also stated that the sale of shares of M/s Seleno Steel Ltd. was agreed on a consideration of Rs. 12.50 crores. Ld. AO did not find the replies and explanations of the assessee justifiable as the alleged document "Sauda-Ikrarnama"
has a mention of Rs. 25.00 crores as consideration of sale, he, therefore, with his conviction had made the addition on the basis of terms and conditions in para 3 of the "Sauda-Ikrarnama", according to which the assessee was to pay Rs.70 lac per month starting from January, 2018, therefore, the amount for 3 months i.e., January to March'2018, in aggregate Rs. 2.10 crore was added as unexplained investment u/s 69 of the Act.
6 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal 4.2 Aggrieved with the aforesaid addition by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A). Wherein, after deliberations Ld. CIT(A) decided the issue by deleting the addition, under the following observations:
4. After taking into consideration the AO's findings and appellant's oral and written submission made in the course of hearing as well as the facts of the case the issues involved in appeal are discussed and decided as under :-
4.1 Ground No. 1 to 3 (revised):- Through these grounds of appeal the appellant has challenged the addition of Rs. 2,10,00,000/- on account of unexplained investment u/s 69 of the Act. During the course of search an agreement for sale was found and seized which is also scanned page no 3 & 4 of the assessment order. The AO during the course of assessment proceedings observed that the agreement has been made for purchase of company M/S Seleno Steel Ltd from Shi Rajesh Agrawal and Shri Mukesh Agrawal for total consideration of Rs. 25 crores out of which sum of Rs. 13 crores was to be paid in cash. The AO thereafter, issued notice u/s 142(1) to both seller and purchaser to explain the content of the impugned agreement. Both, the purchaser and seller has denied to have executed any such agreement. The assessee has explained that it was proposed to purchase a company from the sellers as mentioned above for sale consideration of Rs. 25 crores, however, the liabilities of the company were on higher side, therefore, the sellers were required to ascertain all the liabilities which were either record in books of accounts or not and the agreement was put on hold, however, a token amount of Rs.
6,08,48,000/was paid to seller. Meanwhile the liabilities were under calculation. The AO after considering reply of the assessee and seller held that reply of both the parties are contradictory and there was exchange of cash of Rs. 2,10,00,000/- as mentioned on the impugned agreement and made addition to the income of the appellant.
7 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal 4.1.1 I have considered the facts of the case, plea raised by the appellant and findings of the AO. The appellant during the course of appellate proceedings has brought some facts to light which needs to be discussed. The appellant stated that a sum of Rs. 6.08 crores was given to the sellers as loans and advances to clear the bank loan of M/S. Seleno Steels Ltd. The said loan was repaid in the month of April 2018. In support appellant has filed copies of bank account statement of both the parties. The sum of Rs.
6,08,48,000 was given by the purchaser group to the seller group in the month of Oct, 2017 (i.e., on 4-10-17, 5-10-17 & 16-10-17 etc.) as loans and advances to pay/ clear the bank loan and this amount has been returned/ repaid by M/s. Seleno Group (i.e., the seller party) to the assessee-Group (i.e., the purchaser party) in the month of April, 2018 (i.e., on 23-418, 24-4-18, 15-5-18, 17-5-18, 18-5-18, 22-5-18) which is clearly verifiable from the bank statements, books of account and confirmation of account of the respective parties. The details of payments (i.e., loans & advances) made by 'NR Ispat Group' to 'Seleno Steels Group' to pay/ clear the bank loan/ bank CC of 'Seleno Steels Group', are given as under:
Sl. From To Loan given Loan received/
No. (NR Ispat Group) (Seleno Steels (in the month repaid
Group) of Oct, 17) (in the month of
April, 18)
1. Sanjay Agrawal Rajesh Agrawal 44,08,000 44,08,000
S/o Nand Kishore HUE, (Ramnivas On 5-10-17 On 24-4-18
Agrawal Agrawal Ch.N0.782700
2. Sanjay Agrawal Ramnivas 58,16,000 58,16,000
S/o Nand Kishore Agrawal HUF On 5-10-17 On 24-4-18
Agrawal Ch.N0.782701
3. Sanjay Agrawal Smt.Rukmani 24,00,000
24,00,000
S/o Nand Kishore Devi Agrawal On 23-4-18
On 5-10-17
8
ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal Agrawal Ch.N0.782702
4. NR Ferro & Power P Abha Devi 3,00,00,000 1,14,21,715 Ltd Agrawal On 16-10-17 On 24-4-18
5. NR Ferro & Power Abha Devi Ch.N0.005996 1,50,00,000 Ltd Agrawal On 15-5-18
6. NR Ferro & Power Abha Devi 9,07,844 Ltd Agrawal On 17-5-18
7. NR Ferro & Power Abha Devi 19,39,431 P) Ltd Agrawal On 18-5-18
8. NR Ferro & Power Abha Devi 7,31,010 Ltd Agrawal On 22-5-18
9. Rajesh Agrawal S/o Smt. Mamta Devi 82,24,000 1,68,16,000 Nand Kishore Agrawal Agrawal On 23-4-18 On 4-10-17
10. Rajesh Agrawal S/o Smt. Mamta Devi 85,92,000 Ch.N0.143822 Nand Kishore Agrawal Agrawal On 24-4-18
11. Rajesh Agrawal Mukesh Agrawal 14,08,000 14,08,000 S/o Nand Kishore & Family (HUF) On 4-10-17 On 23-4-18 Agrawal Ch.N0.143823 Total 6,08,48,000 6,08,48,000 The appellant further stated that an undated, unsigned proposed 'SaudaIkrarnama' which was found & seized from the office premises of M/s.NR Ispat & Power Ltd was prepared without there being having knowledge of the sellers i.e., Mr.Rajesh Agrawal & Mr. Mukesh Agrawal. The proposed agreement was prepared for negotiations/ talking about the deal of taking over possession of plant of M/s.Seleno Steels Ltd (now M/s.NRVS Steels Ltd) from Mr.Rajesh Agrawal & Mr.Mukesh Agrawal. For these reasons, the impugned agreement was undated, unsigned, incomplete with dotted lines at various places. During assessment proceedings, summons were also issued by the AO to Mr.Rajesh Agrawal & Mr.Mukesh Agrawal. In reply, Shri Rajesh Agrawal filed submission before the AO and 9 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal the same has been reproduced on page no 7 & 8 of the assessment order. Shri Rajesh Agrawal, erstwhile director of M/s.Seleno Steels Ltd, in his reply submitted before the AO during the assessment proceedings, in clear terms & categorically denied of any kind of alleged cash receipts having been received from the assessee in any manner in respect of the alleged deal of M/s. Seleno Steels Ltd and also stated that he does not know about the so called/ alleged "Sauda Ikrarnama". Further, the terms & condition mentioned in the alleged piece of paper is vague and not acceptable and never dealt on the lines mentioned in such loose paper and he also said that presumption of sale consideration of Rs. 25 crores is hypothetically written and is not correct.
4.1.2 The appellant has also strongly contended by stating that the alleged piece of paper i.e., undated, unsigned and un-witnessed 'Sauda Ikrarnama' is a 'dumb document' in the manner that it was prepared for offering for 32.50 acres of general land & 2.50 acres of adiwasi land to be handed over to the purchaser Group (i.e., NR Group), which has not been done, it means, not materialized & not honored. Thus, this very condition of the alleged piece of paper has not been fulfilled by the seller Group which means out of land mentioned in the alleged 'Sauda Ikrarnam', 32.50 acres of general land & 2.50 acres of Adiwasi land has not been given/ transferred to the assesseeGroup, which fact is clearly verifiable from the audited balance sheet of M/s.Seleno Steels Ltd as on 31-3-17, 31-3-18 & 31-3-19 and also from the balance sheet of the assessee as on 31-3-18 & 31-3-19.
Further, all the pending statutory dues/ liability, pending returns/ statements and any amount dues, related to income-tax, sales tax, excise, GST, water tax and all other statutory dues till 15-9-17 to be borne by the seller group, but none of the terms & 10 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal conditions has been fulfilled/ complied with by the seller Group; and thus, no act/ work done by the seller group (i.e., Seleno Steels Ltd) which is in consonance with the terms & conditions mentioned in the alleged 'Sauda Inkrarnama'. Thereafter, on 1-10-17, it was agreed between both the parties that shares of M/s.Seleno Steels Ltd would be transferred to the family members of the assessee-Group at total sales consideration of Rs.12.50 crores, which is also evident from the statement recorded on 24-10-17 to 26-10-17 u/s132(4) of the assessee-Sanjay Agrawal. Thereafter, on being asked question about the payments made to M/s.Seleno Steels Ltd, in Ans. to Que.No.14, the assessee said that total Rs. 4,26,24,000 has been paid and Rs.8.25 crores approx. is balance to be paid, which means, that total sales consideration would be Rs. 12.50 crores approx., as per the statement recorded u/s132(4) on 24-10-17. Also, it was agreed between both the parties that the shares of M/s.Seleno Steels Ltd would be transferred to the family members of the assessee-Group at a total sales consideration of Rs.12.50 crores, which will be done after repaying the bank loan in the name of M/s.Seleno Steels Ltd, and that is the reason that Rs.6.08 crores has been accepted to give as loans & advance to the 'seller group' to repay the bank loan of M/s.Seleno Steels Ltd; and for this purpose first payment of Rs.1,82,24,000 i.e., Rs.1,68,16,000 and Rs. 14,08,000 was made to Smt Mamta Devi Agrawal and Mukesh Agrawal & family HUF respectively on 4-10-17 as loans and advances to clear/ repay the bank loans of M/s.Seleno Steels Ltd and thereafter, the second payment of Rs. 1,26,24,000 i.e., Rs. 44,08,000 Rs. 58,16,000 and Rs. 24,00,000 to Shri Rajesh Agrawal HUF, Shri Ramnivas Agrawal HUF and Smt. Rukmani Devi Agrawal respectively has been made/ given on 510-17 as loans and advances to clear/ 11 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal repay the bank loans of M/s.Seleno Steels Ltd and thereafter, the third payment of Rs.
3,00,00,000 to Smt. Abha Devi agrawal has been made/ given on 16-10-17 as loans and advances to clear/ repay the bank loans of M/s. Seleno Steels Ltd., and thus, total payment of Rs. 6,08,48,000 has been given as loans & advances to the seller group to repay the bank loan, and it was mutually agreed that after repaying the bank loan by the seller group, shares of M/s. Seleno Steels Ltd would be transferred at a total sales consideration of Rs. 12.50 crores which inter alia includes the income tax liability to be raised in future, as expected by both the parties, for the AY 10-11, and thus, in these terms & conditions, the alleged deal has been finalized between both the parties as mutually agreed upon.
Thereafter, in March, 2018, the purchaser party has repaid the bank loans in the name of M/s. Seleno Steels Ltd and on 25-4-18, 12,71,997 shares of M/s.Seleno Steels Ltd has been transferred @ Rs.93/- per share to the members of the assessee-Group (i.e., the purchaser group) and Rs. 11,82,95,721 has been paid as 'sales consideration' of 12,71,997 shares of M/s. Seleno Steels Ltd. The details of shares of M/s. Seleno Steels Ltd purchased by family members of 'NR Ispat Group' from the family members & associates of 'Seleno Steels Group' on 25-4-18 are as under:
Sl. Name of buyer Name of seller Date of Number of shares Sales No. (NR Ispat (Seleno Steels transfer of transferred consideration Group) Group) shares of shares transferred (Rs.)
1. NR Ferro & Abha Devi 25-4-18 3,75,000 shares 3,48,75,000 Power P Ltd Agrawal @ Rs.93 per share
2. 25-4-18 15,000 shares 13,95,000 @ Rs.93 per share 12 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
3. 25-4-18 53,000 shares 49,29,000 @Rs.93 per share
4. NR Ferro & Economy Infra. 25-4-18 53,571 shares 49,82,103 Power P Ltd (P) Ltd @ Rs.93 per share
5. NR Ferro & Sector Infra. (P) 25-4-18 64,285 shares 59,78,505 Power P Ltd Ltd @ Rs.93 per share
6. Rajesh Agrawal Smt. Mamta Devi 25-4-18 2, 10,200 shares 1,95,48,600 S/o Nand Agrawal @Rs. 93 per share Kishore A
7. Rajesh Agrawal Mukesh Agrawal 25-4-18 17,600 shares 16,36,800 S/o Nand & Family, HUF @ Rs.93 per share Kishore
8. Vijay Agrawal Shri Rajesh Ag 25-4-18 84,400 shares 78,49,200 S/o Ramnivas Ag @ Rs.93 per share
9. Vijay Agrawal Aman Agrawal 25-4-18 4,180 shares 3,88,740 @ Rs.93 per share
10. Vijay Agrawal Shri Mukesh 25-4-18 28,100 shares 26,13,300 Kumar Agrawal @ Rs.93 per share
11. Vijay Agrawal Shri Ramnivas 25-4-18 86,300 shares 80,25,900 Agrawal @ Rs.93 per share
12. Vijay Agrawal Sanjay Gadodia 25-4-18 20,000 shares 18,60,000 @ Rs.93 per share
13. Sanjay Agrawal Shri Rajesh Ag, 25-4-18 55, 100 shares 51,24,300 HUF (Ramnivas) @ Rs.93 per share
14. Sanjay Agrawal Shri Ramnivas 25-4-18 72,700 shares 67,61,100 Agrawal, HUF @ Rs.93 per share
15. Sanjay Agrawal Smt. Rukamni 25-4-18 30,000 shares 27,90,000 Devi Agrawal @ Rs.93 per share
16. Sanjay Agrawal Ramnivas 25-4-18 40,000 shares Agrawal @ Rs.93 per share 37,20,000
17. Sanjay Agrawal Camllia Comm 25-4-18 10,761 shares 10,00,773 Ltd @ Rs.93 per share
18. Sanjay Agrawal Himadri Deal (P) 25-4-18 4,800 shares 4,46,400 Ltd @ Rs.93 per share
19. Sanjay Agrawal Satyam tradcom 25-4-18 14,000 shares 13,02,000 Ltd @ Rs.93 per share
20. Sanjay Agrawal Nandan 25-4-18 8,000 shares 7,44,000 Mercantiles (P) L @ Rs.93 per share 13 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
21. Sanjay Agrawal PNR Holding (P) 25-4-18 1,200 shares 1,11,600 Ltd @ Rs.93 per share
22. Sanjay Agrawal Rajesh Vanijya 25-4-18 2,800 shares 2,60,400 (P) Ltd @Rs.93 per share
23. Sanjay Agrawal Star Trafin (P) 25-4-18 1,400 shares 1,30,200 Ltd @ Rs.93 per share
24. Sanjay Agrawal Alexcy Tracon 25-4-18 5,120 shares 4,76,160 (P) Ltd @ Rs.93 per share
25. Sanjay Agrawal Shreevar 25-4-18 6,000 shares 5,58,000 Overseas Ltd @ Rs.93 per share
26. Sanjay Agrawal Sonal Tie-up (P) 25-4-18 2,880 shares 2,67,840 Ltd @ Rs.93 per share
27. Sanjay Agrawal Trident Lami- 25-4-18 5,600 shares 5,20,800 pack (P)Ltd @ Rs.93 per share Total: 12,71,997 shares 11,82,95,721 @ Rs.93 per share 4.1.3 Lastly, the appellant by taking alternate plea has stated that the AO has completely failed to bring on record independent evidence on record to establish nexus of payment of Rs. 2.10 crores in cash and the additions have been made on sheer assumption and presumption drawn from impugned dumb document.
4.1.4 After considering facts of the case, in-depth explanation of the facts by the appellant and findings of the AO, I am of the considered opinion that neither any of the person/firm/company nor any of the director from either group i.e. purchaser or seller group has ever admitted that the agreement under consideration was materialised and payment of Rs. 2.10 crores was made by the purchaser to the seller and that too in cash.
Thus, it can safely be held that no such transaction actually took place and the entire addition has been made on sheer presumption and assumption basis. The seller in his statement recorded on oath has also denied to have any information about these 14 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal transactions even does not have any knowledge of any such agreement. The appellant in his statement has admitted that the agreement was prepared unilaterally and without sharing any information to the seller party. The draft agreement was prepared for negotiations. On the other hand the AO failed to establish how the said transactions materialised. The AO in support of his findings has stated that possession of the impunged company has taken by appellant on 15.09.2017 and for this reason one of the director Shri Vijay Agrawal and his nephew Shri Ankit Agrawal were present at the time of search in the factory premises. The reasoning of the AO does not holds ground for this very basic reason that mere presence of any person on the factory premises doesnot tantamount that the possession of the company was taken by appellant. Also, the AO failed to bring on record any cogent evidence, creating direct nexus of payment of sum of Rs. 2.10 crores towards purchase of the said company. Therefore, in absence of any cogent evidence having direct nexus with the impunged transaction, the said undated, unsigned and rough agreement cannot be used against the assessee and are to be treated as deaf and dumb documents.
4.1.5 This is settled legal position that any 'dumb document' cannot be used as an evidence to draw an adverse inference against the assessee. Case laws supporting this proposition are as under:-
ACIT vs. Satyapal Wassan (2007) 295 ITR (AT) 352 (Jabalpur) Held that 15 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal "the crux of these decisions is that a document found during the course of search must be a speaking one and without any second interpretation, must reflect all the details about the transactions of the assessee in the relevant assessment year. Any gap in the various components as mentioned in section 4 of the Income Tax Act must be filled up by the Assessing Officer through investigations and correlations with the other material found either during the course of the search or on the investigation. As a result, we hold that document No.7 is a non-speaking document."
Most important ratio laid down in the said judgment is that "impugned document" must be speaking one and without any second interpretation and must reflect all the details about transactions of the assessee. In the instant case, the impunged loose papers are nothing but extract of a rough/draft agreement unilaterally prepared by the appellant.
The dumb agreement does not even bear and signature, date of execution, date of payment of alleged cash, payer/receiver of cash etc. also, the terms and conditions mentioned in the impunged agreement has not been fulfilled, however, the AO has presumed that the cash of Rs. 2.10 crore has been paid by the appellant neglecting all the other conditions such as transfer of land, discharge of liabilities by the sellers, and various others. The liabilities have been discharged by sellers in April 2018 and thereafter, shares were transferred to the purchaser group members. The impunged loose papers are undated, unsealed and unsigned. Also, the AO does not have any independent corroborative evidence having nexus that the alleged cash payment by the appellant. Absence of these vital details is making the loose papers under consideration as "deaf & dumb document".
The onus was solely on the AO to fill such vital gaps by bringing positive evidence on record and prove the allegation about alleged "unaccounted cash payment" by the assessee, which he utterly failed to do so.16 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal CBI vs VC Shulda 3 SCC 410 The Hon'ble Supreme Court has held that loose sheets of paper cannot be termed as 'book' within the meaning of s. 34 of evidence Act. It has also been held therein by the Hon'ble Supreme Court that even correct and authentic entries in books of account cannot, without independent evidence of their trustworthiness, fix a liability upon a person. The Hon'ble Supreme Court also observed that even assuming that the entries in loose sheets are admissible under s. 9 of the Evidence Act to support an inference about correctness of the entries still those entries would not be sufficient without supportive independent evidence.
Rakesh Goyal vs. ACIT (2004) 87 TTJ (Del) 151 The findings of Hon 'ble Tribunal was as under: -
"20.1 After perusing the findings of the CIT(A) and the submissions of both the parties, we do not find any infirmity in these findings. Firstly, the finding of the CIT(A) has not been controverted by the learned Departmental Representative by filing any positive evidence. The copies of the pages found from the possession of the assessee are placed in the paper book and after going through these papers, we find that these are simply deaf and dumb documents and they cannot be considered for making any addition. This is a settled principle of law that any document or entry recorded in those documents should be corroborated with positive evidence. Here in the present case nothing has been corroborated or proved that assessee was dealing in money lending business.
Mohan Foods Ltd vs. DCIT (2010) 123 ITD 590 (Del) -
Held that although the contents of the relevant seized documents show that the amounts mentioned therein relate to some expenditure, in the absence of any other evidence found during the course of search or brought on record by the AO to show that the said expenditure was actually incurred by the assessee, the same cannot be added to the undisclosed income of 17 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal the assessee by invoking the provisions of s. 69C--Assessee explained that the said entries represented estimates made by its employees in respect of proposed expenditure--There is no evidence on record to rebut/controvert the said explanation- Additions not sustainable CIT vs. S M Agarwal (2007) 293 ITR 43 (Del) Held that "In this case the department seized documents "Annexure A-28 p. 15, - gives the details of certain handwritten monetary transactions which shows that the assessee had given a loan of Rs. 22.5 lacs on interest and earned interest income of Rs. 3.55 lacs on it. The Tribunal hold this document as dumb document.
The relevant findings of the Tribunal as mentioned in the above order is as under: -
"We have ourselves examined the contents of the document and are unable to draw any clear and positive conclusion on the basis of figures noted on it. The letters 'H.S. ', 'T. 2 ' and 'D-Shop 'cannot be explained and no material has been collected to explain the same. Likewise, the figures too are totally unexplained and on the basis of notings and jottings, it cannot be said that these are the transactions carried out by the assessee for advancing money or for taking money. Thus, in our opinion, this is a dumb document. "
Hon'ble High Court confirmed the findings of the Tribunal and relevant findings was as under: -
"12. It is well settled that the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. So, unless and until the contents of the document are proved against a person, the possession of the document or handwriting of that person, on such document by itself cannot prove the contents ofthe document. These are the findings offact recorded by both the authorities i.e. CIT(A) and the Tribunal.18 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal "15. Similarly, in the present case, as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of CIT(A) and the Tribunal to this effect. Since the conclusions are essentially factual, no substantial question of law arises for consideration".
Jayantilal Patel vs. ACIT & Ors (1998) 233 ITR 588 (Raj) Held that -
"During search at the residence of Dr. Tomar, the Department official found a slip containing some figures. This piece of paper claimed to have been recovered at the time ofsearch contains figures under two columns. In one column, the total of these figures comes to Rs. 17,25,000 from 31st May, 1989, to 8th Dec., 1989, and in the other column, the total of these figures comes to Rs, 22, 12,500. An addition of Rs. 22, 12,500 on the basis of figures on a small piece of paper in respect of purchase of Plot No. B-4, Govind Marg, Jaipur was made by the AO. This plot B-4, Govind Marg, Jaipur, has been purchased jointly by Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF.
Held that no addition on account of entries on a piece of paper which is claimed to have been found at the time of search, can be made, treating the figures as investment for purchase of plot No. B-4, Govind Marg, Jaipur in the hands of Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar HUF. "
N K Malhan vs. DCIT (2004) 91 TTJ(De1) 938 Held that-
"We have perused the aforesaid explanation and the seized document placed at assessee 's paper book-I pp. 48 and 50. The document does not state of any date or the year against the entries written therein. It does not show whether the assessee has made or received any payment. It also cannot be deciphered from the said documents that the entries therein pertain to the block period The AO also did not bring on record any material to 19 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal show that any investment has been made by the assessee in any chit fund company or otherwise. The document found and seized might raise strong suspicion, but it could not be held as conclusive evidence without bringing some corroborative material on record the document contained only the rough calculations and was silent about any investment. On the basis of such a dumb document, it cannot be said that there were investments made in fact by the assessee. Heavy onus lay upon the Revenue to prove that the document gives rise to undisclosed investment by the assessee. This onus has not been discharged. Accordingly, no addition of undisclosed income could be made on the basis of such a document. Such a view has also been entertained by the Hon 'ble Allahabad High Court in CIT vs. Dayachand Jain vaidya (1975) 98 ITR 280 (All). The addition so made, therefore, is directed to be deleted.
Stanamsingh Chhabra vs. Dy. CIT (2002) 74 TTJ (Lucknow) 976:
None of the loose papers seized are in the hand writing of the assessee. There is some jotting by pencil in some coded form on the loose papers made by the surveyed person or some other person. Moreover, no entries are supported by any corroborative evidence; such loose papers cannot be called even the documents as they are simply the rough papers to be thrown in the waste paper basket. In this connection, the assessee relies upon the court decisions.
CIT vs. Chandra Chemouse P. Ltd. (2008) 298 ITR 98 (Raj.):
it is held that-
(i) Additions can be made only when evidence is available as a result of search or a requisition of books of accounts or documents and other material. However, additions cannot be made on the basis of inferences.
(ii) No facts were available to AO after search and inference ofAO did not fall within the scope of Section 158BB.
(iii) Deletion of additions made by Tribunal of assumed undeclared payments made for purchase of property was on basis of facts.20 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal Ashwani Kumar V. ITO (1991) 39 ITD 183 (Del) and Daya Chand V. CIT (2001) 250 ITR 327 (Del) and S.P. Goel V. DCIT (2002) 82 ITD 85 (Mum.):
Nine out of 19 slips found were without any name or amount and therefore were dumb documents and no adverse inference could be drawn.
Common Cause (A Registered Society) Vs. Union of India -- 301TJ 197 (SC).
In this case, the Hon'ble Court held that without any independent evidence or corroborative material, no addition is permissible on the basis of loose paper jottings & notings. The relevant paras of the order are as under: -
16. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla 's case (supra) has dealt with the matter though at the stage of discharge when investigation had been completed but same is relevant for the purpose of decision of this case also. This Court has considered the entries in Jain Hawala diaries, note books and file containing loose sheets of papers not in the form of "Books of Accounts " and has held that such entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible
17. It has further been laid down in V.C. Shukla Supra as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability.21 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
18. This Court has further laid down in V.C. Shukla (Supra) that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted hereinbelow: -
"14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words:
"An account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debits and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arises to do so for his future purpose. Admittedly the said diaries were not being maintained on day-to-day basis in the course of business. There is no mention of the dates on which the alleged payments were made. In fact, the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. They have been shown in abbreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to. "
19. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus;
"37. In Beni v. Bisan Dayal it was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In 22 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts. "
20. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed bp this Court.
4.1.6 Further, in numerous other case laws courts have consistently upheld the view that no addition could be made in the hands of the assessee on the basis of the dumb loose papers seized during search, in absence of any corroborative material to show unaccounted cash payment by the appellant. Some of the case laws are as under: -
(i) M M Financiers (P) Ltd vs. DCIT (2007) 107 TTJ (Chennai) 2000 Held that "no addition could be made in the hands of assessee on the basis of the dumb loose slips seized from his residence, in the absence of any corroborative material to show payment of any undisclosed consideration by the assessee towards purchase of land"23 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
(ii) Monaa Metals (P) Ltd vs. ACIT 67 TTJ 247 (All. Trib)--
Holding that Revenue has to discharge its burden of proof that the figures appearing in the loose papers found from assessee's possession constitute undisclosed income. [In the present case, loose papers were not even seized from assessee 's possession].
(iii) Pooia Bhatt vs. ACIT (2000) 73 ITD 205 (Mum. Trib) Held that where document seized during search was merely a rough noting and not any evidence found that actual expenditures were not recorded in books of account, additions not justified. [In the instant case, similarly no other corroborative evidence was found in search to prove that details/figures mentioned in notings on page 1 17 to 119 of A/ I represent 'on money' payments by the assessee].
(iv) Atual Kumar Jain vs. DCIT (2000) 64 TTJ (Del.Trib) 786 -
Held that additions based on chit of paper, surmises, conjectures etc could not be sustained in the absence of any corroborative evidence supporting it. [Similarly in present case, neither either parties have admitted payment/receipt of 'on money' nor any corroborative evidence was seized to support the findings of the AO].
(v) S K Gupta vs. DCIT (1999) 63 TTJ (Del.Trib) 532 Held that "that additions made on the basis of torn papers and loose sheets cannot be sustained as same do not indicate that any transaction ever took place and does not contain any information in relation to the nature and party to the transaction in question. "
(vi) Jagdamba Rice Mills vs. ACIT (2000) 67 TU (Chd) 838 Held that "No addition can be made on dump documents".24 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal It is settled legal position that onus of proof is on the person who makes any allegation and not on the person who has to defend. As per legal maxim "affairmanti non neganti incumbit probation " means burden of proof lies upon him who affirms and not upon him who denies. Similarly, as per doctrine of common law "incumbit probation qui digit non qui negat" i.e. burden lies upon one who alleges and not upon one who deny the existence of the fact. Further, it is most important to mention that neither the appellant nor any person/director from seller group has ever admitted that sum of Rs. 2.10 was paid by appellant or was received by the seller party. The AO has failed to discharge his onus of proof especially when addition has been made under "deeming fiction". In view of this lacune on the part of AO, impugned addition is legally not sustainable. As held in the case of CIT v/s KP Varghese 131 ITR 574 (SC) by Hon'ble Apex Court in absence of evidence that actually assessee paid more amount than declared in registered deed, no addition can be made. In the case of Bansal strips (P) Ltd & Ors vs. ACIT (2006) 99 ITD 177 (Del) it has been held that :-
"If an income not admitted by assessee is to be assessed in the hands of the assessee, the burden to establish the such income is chargeable to tax is on the AO. In the absence of adequate material as to nature and ownership of the transactions, undisclosed income cannot be assessed in the hands of the assessee merely by arithmetically totally various figures jotted down on loosed document".
4.1.7 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor any person has ever admitted about payment of cash of Rs. 2.10 crores by the appellant to the seller party. In absence of any 25 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal corroborative evidence to prove that there was exchange of cash between purchaser and seller group, the AO has no locus to assume that appellant has made paid sum of Rs.
2,10,00,000/- in cash towards purchase of the said company. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborate.
Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lai Girdharilal v/s CIT (1954) 26 ITR 736 (SC).
4.1.7 In view of the above discussion, material evidences on record and case laws cited, firstly, the loose papers or rather say it as dumb document should be a speaking one having direct nexus with the cash payment, which was not in the case of appellant.
Secondly, the loose papers are undated and unsigned. Thirdly, no independent incriminating material was found suggesting alleged cash payment. Fourthly, neither the appellant nor the seller group has admitted of any such cash transaction. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justified in making additions simply on guess work and solely on the basis of some dumb diary. Thus, the 26 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal additions made by the AO amounting to Rs. 2,10,00,000 are Deleted. Therefore, appeal on these grounds is Allowed.
4.2 Ground No. 4(revised): - Through this ground of appeal, the appellant has taken a plea that no proper approval was taken u/s 153D of the Act. on perusal of the copy of assessment order it was found that the AO before passing assessment order has taken approval from Joint Commissioner of Income Tax(Central), Raipur and approval was granted vide letter F.No. JCIT(c)/RPR/153D/2019-20/329 dated 20.12.2019. Therefore, the plea raised by the appellant has no merit and is therefore, rejected. Therefore, appeal on this ground is Dismissed.
4.3 The aforesaid decision of Ld. CIT(A) was not found satisfactory by the revenue; therefore, the matter is further carried to challenge by way of an appeal before us, which is under consideration in the present case.
5. At the outset, Ld. CIT DR on behalf of the revenue have submitted that a document was surfaced during the search and seizure operation from the premises of a company in which the assessee is a director. Though the said document i.e., "Sauda-Ikrarnama" was unsigned, undated or on a plan paper, still the same cannot be brushed aside as the proposed terms and conditions of the said document have been materialized in the due course of time. When the issue was confronted to the assessee Mr. Sanjay Agrawal, who was the buyer 27 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal as per the said agreement and Mr. Rajesh Agrawal, one of the sellers, it is observed that their response before the Ld. AO were contradicting in nature.
The sale of the plant of M/s Seleno Steel Ltd. was done, however, the amount of consideration was changed on record. Under such circumstances, it is clearly established that the said agreement was the real outline of actual transactions, out of which certain transactions which were to be executed, have been materialized. Out of such transactions, a transaction of payment of Rs. 14/-
crores, in 20 instalments of Rs.70/- lac per month starting from January, 2018, which could not be plausibly explained by the assessee, are considered as unexplained investment of the assessee and, therefore, an addition of three instalments starting from Jan, 2018 ending with March, 2018 which falls within the period of the year consideration are added to the income of the assessee u/s 69 of the I.T. Act. Ld. CIT(A) have not appreciated the facts of the case in right perspective, he absolutely got carried away with the explanations / contentions of the assessee and considered the alleged document as dumb document, whereas on the contrary the assessee had completed the transactions on a consideration lower then the amount shown in the said agreement, it was just an eyewash, to evade taxes on the undisclosed payments made towards the alleged investment in the plant purchased. Such over and above payment is nothing, but payments made in cash by the sellers to the buyers which qualifies to be termed as unexplained investment under the 28 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal provisions of section 69 of the Act. Based on aforesaid submissions, it was the request of Ld. CIT(A) that the Ld. AO has rightly made the addition which deserves to be sustained and the decision of Ld. CIT(A) which was under
misinterpretation of the facts is liable to be set aside.
6. In rebuttal to the submissions of the CIT DR, Ld. AR on behalf of the assessee have furnished a detailed written submission, which is extracted hereunder for the sake of clarity:
Before the Hon'ble Income Tax Appellate Tribunal. Raipur Bench. Raipur Assessee: Sanjay Agrawal Raigarh-496001 (CG), PAN-ACIPA2389J ITA No. 108/Rpr/2020 AY 18-19 (D) CO No. 1/Rpr/2021 AY 18-19 (A) Written submission-I (on merits) 1.1. Search & seizure operation u/s 132 has been conducted upon the assessee on 24.10.17 along with group concern M/s. NR Ispat & Power (P) Ltd, Raigarh & other group concerns along with the family members; statement of the assessee was recorded u/s 132(4) on oath on 24-10-17 to 26-10-17 (running into 27 pages) (PB-Pg. 39 to 65) in his individual capacity and also on behalf of M/s. NR Ispat & Power (P) Ltd;
1.2. Search u/s 132 has also been conducted upon M/s. Seleno Steels Ltd (now M/s. NRVS Steels Ltd) and its director Shri Rajesh Agrawal & Shri Mukesh Agrawal on 24-10-17; statement of Shri Rajesh Agrawal (Seleno Steels) was recorded u/s 132(4) on oath on 24-10-17 (running into 24 pages) (PB-Pg. 66 to 88);
1.3. the assessee-lndl has filed ROI u/s 139(1) for AY 18-19 on 31-8-18 declaring income of Rs. 34,60,410; Id AO has made addition of Rs. 2.10 crores in AY 18-19 on the basis of a document 'Sauda-lkrarnama' (PB-Pg. 36 to 38) which was found & seized from the office premises of M/s. NR Ispat & Power;
29 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal 1.4. addition of Rs. 2.10 crores on the count of unexplained/ undisclosed payments/ investment u/s 69 for the purchase deal of 'plant' of M/s. Seleno Steels Ltd (now M/s. NRVS Steels Ltd) and on the basis of cash payments presumed to have been paid in the month of Jan, 2018 to Mar, 2018, the period relates to after the date of search, i.e., 24-10-17; it is based on presumption/ surmises that the alleged cash payments of Rs. 2.10 crores has been paid to Mr. Rajesh & Mukesh Agrawal, the erstwhile directors of M/s. Seleno Steels Ltd, in respect of the impugned proposal/ offer prepared for purchase of the 'plant' of M/s. Seleno Steels Ltd; 1.5. in fact, the shares of 'M/s. Seleno Steels Ltd' has been transferred on 25-4-18, which comes in the AY 19-20, and Rs. 11,82,95,721 has been paid by cheque/ banking channel in the month of April, 2018 (PB-Pg.10, 11), and thus, the alleged purchase of 'Seleno plant' has been eventually materialized in AY19-20, and not in AY18-19;
1.6. in AY 18-19, only Rs.6.08 crores has been given as loans and advances to clear the bank loan of M/s. Seleno Steels, which has been received back in the month of April, 2018, and thus, in AY 18-19, no purchase transaction has been made between the alleged parties; 1.7. the addition of Rs. 2.10 crores has been made by the Id AO is on the basis of a piece of loose paper which is an undated, unsigned proposed 'Sauda-lkrarnama' which was found & seized from the office premises of M/s. NR Ispat & Power;
1.8. in fact, it was kept ready unilaterally (without there being having knowledge of the persons i.e., Mr.Rajesh & Mr.Mukesh Agrawal, the impugned sellers mentioned in the 'SaudaIkrarnama'), in the month of Aug, 2017 by the assessee-Sanjay Agrawal, for negotiations/ talking about the deal of taking over possession of 'plant' of M/s.Seleno Steels Ltd (now M/s.NRVS Steels Ltd) from Mr.Rajesh & Mr.Mukesh Agrawal, the erstwhile directors of Ws.Seleno Steels; that the 'Sauda-lkrarnama' was one sided typed to negotiate the deal with Mr.Rajesh & Mr.Mukesh Agrawal, without there being having knowledge of them; that this was only a offer/ proposal, unilaterally proposed 'Sauda Ikrarnam' which was prepared for making the impugned deal with the impugned persons;
1.9. while it was not done so on the vary basis/ dotted lines of the terms & conditions mentioned in this unilaterally prepared 'Sauda Ikrarnam' which was not even knowledge of the said persons; 1.10. that this fact, is self evident since it is undated, unsigned and un-witnessed, that it is neither signed by the assessee nor signed by the alleged two persons because this unilaterally prepared offer/ proposal/ 'Sauda Ikrarnam' was not even within the knowledge of the said 2 persons; and thus, there is no question of any kind of alleged cash payments as alleged/ presumed by the Id AO, more so, in the future date such as in Jan, 2018 to Mar, 2018; the Id AO has not brought any independent corroborative material evidence on record to prove that the alleged cash payment of Rs.2.10 crores (i.e., Rs.70 lakhs into 3 times) has ever been made by the assessee to the said persons i.e., Mr.Rajesh & Mr.Mukesh;
30 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal 1.11. that for verifying the fact, the Id AO has summoned to the said persons i.e., Mr.Rajesh & Mr.Mukesh on 16-10-19 (assessment order, Pg.7, Para 4.4) and in response to, Mr. Rajesh Agrawal, the erstwhile director of M/s.Seleno Steels, replied before the ld AO during the assessment proceedings (assessment order, Pg.7, Para 4.5), which is as under:
"On the basis of above "Sauda Ekrarnama", Your honor has presumed that the assessee and Shri Mukesh Agrawal has sold a company named M/s.Seleno Steel Ltd to Shri Sanjay Agrawal for a total consideration settled at Rs. 25 crores of which Rs.2 crores was paid by cash. Above observation is objected, is without any creditable supporting and far from truth, submitted as below:
1. The assessee doesn't know above "Sauda Ekrarnama". This was not found from the premises of assessee. As your Honor has mentioned at query No.5 of above notice, this was found and seized from the office premises of M/s.NR Ispat & Power P Ltd. It is also not know who has written this paper. Assessee denies categorically the execution of above "Sauda Ekrarnama" by assessee.
2. Even by cursory look at above "Sauda Ekrarnama", one can say that this is not a document and does not have any evidentiary value for following reasons:
i. This is not executed. None of the executants have signed it. ii. None of the witnesses have signed it.
iii.No date of execution mentioned.
iv. There are cutting and corrections at many places. v. At para no. 3 and 7 there are interpolation by hand after the typed contentions. Therefore, the presumption of your Honour that there was sale consideration of Rs.25 crore is not correct.
Spontaneous Reply It is submitted that during operation u/s132 on 24-10-17, my statement was recorded on 24-10- 17 and 26-10-17 u/s132(4). Number of questions were asked with regard to sale of my shares of Seleno Steel Ltd to NR group.
A specific question was asked at serial no. 53 about above "Sauda Ekrarnama". In reply to it, I have categorically denied above "Sauda Ekrarnama". Please also refer following replies:
I. Reply to query no.57 II. Reply to query no.58 III. Reply to query no.60 On the other hand, in following replies, I have categorically sated that sale of shares is for Rs.12.50 cores. Please see following replies:31 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal i. Reply to query no. 46 ii.
Reply to query no. 54 Submitted that in the spontaneous reply u/s 132(4) during search operation, in the statement I had categorically denied the execution of above statement which I confirm. Negotiations were going on between the assessee and Shri Sanjay Agrawal of NR group to sell the shares of Seleno Steel Ltd to them from 3-4 months before the search operation but because of plant becoming obsolete due to low capacity and old technology coupled with ascertainment of heavy burden due to liabilities of taxation, financial institution; plant requiring immediate updation, etc. the negotiation was prolonged.
Your Honor kindly appreciate that no such amount as mentioned in the above so called "Sauda Ekrarnama" was received by the assessee." 1.12. And thus, Shri Rajesh, erstwhile director of M/s. Seleno Steels, in his reply submitted before the ld AO during the assessment proceedings, in clear terms & categorically denied of any kind of alleged cash receipts having been received from the assessee in any manner in respect of the alleged deal of M/s. Seleno Steels; that he stated that he does not know about the so called/ alleged "Sauda Ikrarnama" which has been found in the premises of NR Ispat; that he also said that he does not know that who has prepared/ written the alleged "Sauda Ikrarnama"; that he also said that the terms & condition mentioned in the alleged piece of paper is vague and not acceptable and never dealt on the lines mentioned in such loose paper and he also said that presumption of sale consideration of Rs. 25 crores is hypothetically written, not correct & not dealt with any one;
1.13. he also stated that his statement was recorded u/s 132(4) on 24-10-17 to 26-10-17 running into 24 pages (PB-Pg. 66 to 88) by the search team and on being asked about alleged "Sauda Ikrarnama", he in Sl.No.53, clearly denied (PB-Pg. 82) the alleged "Sauda Ikrarnama"; he also stated that the search team has asked question about sale of shares of M/s.Seleno Steels to the assessee Group, he in query No. 57, 58 & 60, very clearly replied (PB-Pg.82, 83, 84) that sale of shares of M/s. Seleno Steels has been made for Rs. 12.50 crores to the assessee Group members (i.e., copy of statement recorded u/s 132(4) dt. 24-10-17 to 26-10-17 at PB-Pg.82, Ans. to que No. 54); he stated that in search statement u/s132(4) on 24-10-17 to 26-10-17, he, in clear terms, denied about making of any kind of "Sauda Ikrarnama" and he duly stated that shares has been sold at Rs. 12.50 crores to the assessee Group members; and lastly, he clearly stated that no such amount as mentioned in the so called "Sauda Ikrarnama" which is undated, unsigned, un- witnessed, was received by him from the assessee;
1.14. that however, it is also correct that Rs.6,08,48,000 has been given by the assessee-Group to various family members of the seller group (i.e., details of loans & advances given are enclosed at PB-Pg. 6, 7), that it is also verifiable from the bank statements, books of account, account 32 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal confirmations of the respective family members of the assessee-Group (i.e., the purchaser party) as well as M/s. Seleno Steels Group (i.e., the seller party); in fact, this amount of Rs. 6,08,48,000 was given by the purchaser group to the seller group in the month of Oct 2017 (i.e., on 4-10-17, 5-10-17 & 16-10-17 etc.) as loans and advances to pay/ clear the bank loan and this amount has been returned/ repaid by M/s. Seleno Group (i.e., the seller party) to the assessee-Group (i.e., the purchaser party) in the month of April, 2018 (i.e., on 23-4-18, 24-4-18, 15-5-18, 17-5-18, 18-5-
18, 22-5-18) which is clearly verifiable from the bank statements, books of account and confirmation of account of the respective parties;
1.15. Details of payments (i.e., loans & advances) made by 'NR Ispat Group' to 'Seleno Steels Group' to pay/ clear the bank loan/ bank CC of 'Seleno Steels Group', are given as under:
Sl. From To Loan given Loan received/
No. (NR Ispat Group) (Seleno Steels(in the month repaid
Group) of Oct, 17) (in the month of
April, 18)
1. Sanjay Agrawal Rajesh Agrawal 44,08,000 44,08,000
S/o Nand Kishore HUE, (Ramnivas On 5-10-17 On 24-4-18
Agrawal Agrawal Ch.N0.782700
2. Sanjay Agrawal Ramnivas 58,16,000 58,16,000
S/o Nand Kishore Agrawal HUF On 5-10-17 On 24-4-18
Agrawal Ch.N0.782701
3. Sanjay Agrawal Smt.Rukmani 24,00,000 24,00,000
S/o Nand Kishore Devi Agrawal On 5-10-17 On 23-4-18
Agrawal Ch.N0.782702
4. NR Ferro & Power P Abha Devi 3,00,00,000 1,14,21,715
Ltd Agrawal On 16-10-17 On 24-4-18
5. NR Ferro & Power Abha Devi Ch.N0.005996 1,50,00,000
Ltd Agrawal On 15-5-18
6. NR Ferro & Power Abha Devi 9,07,844
Ltd Agrawal On 17-5-18
7. NR Ferro & Power Abha Devi 19,39,431
P) Ltd Agrawal On 18-5-18
8. NR Ferro & Power Abha Devi 7,31,010
Ltd Agrawal On 22-5-18
9. Rajesh Agrawal S/o Smt. Mamta Devi 82,24,000
1,68,16,000
Nand Kishore Agrawal On 23-4-18
On 4-10-17
Agrawal
33
ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
10. Rajesh Agrawal S/o Smt. Mamta Devi Ch.N0.143822 85,92,000 Nand Kishore Agrawal On 24-4-18 Agrawal
11. Rajesh Agrawal Mukesh Agrawal 14,08,000 14,08,000 S/o Nand Kishore & Family (HUF) On 4-10-17 On 23-4-18 Agrawal Ch.N0.143823 Total 6,08,48,000 6,08,48,000 1.16. the other terms & conditions of the "Sauda Ikrarnama" was also not materialized/ not correct and it was only hypothetically prepared proposal/ offer for the meeting for the alleged deal of 'plant' of M/s. Seleno Steels with the said 2 persons i.e., Mr.Rajesh & Mr.Mukesh, that Rs.2.50 crores as advance and at the time of handing over -the plant on 15-9-17 again cash payment of Rs.2.50 crores, both the conditions was unilaterally presumed by the assesseeGroup at the initial stage to negotiate the deal of purchase of plant of M/s. Seleno Steels, which in fact, not executed and the main reason is for its 'non-execution' is that it was an offer/ proposal kept ready unilaterally prepared at initial stage by the assessee-Mr. Sanjay Agrawal & it's totally unawareness of the said person i.e., Mr.Rajesh Agrawal in respect of the alleged "Sauda Ikrarnama" which was unilaterally prepared by the assessee-Sanjay Agrawal on forecast/ estimates/ projected figures/ expected terms & conditions were written therein so that it could be finalized by way of meeting with the said person i.e., Mr.Rajesh (M/s.Seleno Group);
1.17. the ld AO presumed that Rs.2.10 crores has been paid by the assessee-Sanjay Agrawal to the said 2 persons in the month of Jan, 2018 to Mar, 2018, for which no independent corroborative material evidence has been brought on record by the Id AO to substantiate his baseless contention; that the alleged person Mr.Rajesh, erstwhile director of M/s. Seleno Steels has clearly stated/replied before the Id AO (in response to summons issued to him) in its reply that he has not received any alleged cash amount on the basis of so-called "Sauda Ikrarnama" which was not even within knowledge of him; that he only said that shares of M/s.Seleno Steels Ltd has been sold at Rs. 12.50 crores to the assessee-Group as per their meeting held which is certainly not on the basis of the so-called "Sauda Ikrarnama";
1.18. that the alleged piece of paper i.e., undated, unsigned and un-witnessed 'Sauda Ikrarnama' is a 'dumb document' in the manner that it was prepared for offering for 32.50 acres of general land & 2.50 acres of adiwasi land to be handed over to the purchaser Group (i.e., NR Group), which has not been done, it means, not materialized not honored, and, this fact is very evident from the audited balance sheet of M/s.Seleno Steels Ltd as on 31-3-18 and thus, this very condition of the alleged piece of paper (i.e., undated, unsigned and un-witnessed) has not been fulfilled by the seller Group (i.e., Seleno Steels Group); it means, out of land mentioned in the alleged 'Sauda 34 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal Ikrarnam', 32.50 acres of general land & 2.50 acres of Adiwasi land has not been given/ transferred to the assessee-Group, which fact is clearly verifiable from the audited balance sheet of M/s.Seleno Steels Ltd as on 31-3-17, 31-318 & 31-3-19 and also from the balance sheet of the assessee as on 31-3-18 & 31-3-19; it means, no work/ act has been done on the lines mentioned in the alleged 'Sauda Inkrarnama' which has not even been signed by any of the alleged parties, and thus, it has not been acted upon by both the parties.
1.19. in the alleged 'Sauda Inkrarnama' i.e., undated, unsigned and un-witnessed, it was mentioned that the bank loan will be closed up by the seller group up to the cutoff date i.e., 15-9-17, however, this condition was also not fulfilled by the seller group, and the bank loan has, in fact, been closed up in the month of Mar, 2018 and thus, this condition has also not been complied with by the seller group;
1.20. it was also mentioned in the alleged 'Sauda Inkrarnama' i.e., undated, unsigned and unwitnessed, that all the pending statutory dues/ liability, pending returns/ statements and any amount dues, related to income-tax, sales tax, excise, GST, water tax and all other statutory dues till 15-9-17 to be borne by the seller group, but none of the terms & conditions has been fulfilled/ complied with by the seller Group; and thus, no act/ work done by the seller group (i.e., Seleno Steels) which is in consonance with the terms & conditions mentioned in the alleged 'Sauda Inkrarnama' i.e., undated, unsigned and un-witnessed, and thereafter, as on 1-10-17, it was agreed between both the parties that shares of M/s.Seleno Steels Ltd would be transferred to the family members of the assessee-Group at total sales consideration of Rs. 12.50 crores, which is also evident from the statement recorded on 24-10-17 to 26-10-17 u/s132(4) of the assessee-Sanjay Agrawal (the purchaser party) in which in Ans. to Que. No.12, it is said by the assessee that said Ikrarnama is fake, unknown to him and no cash transaction has been done with M/s. Seleno Steels Ltd, 1.21. and thereafter, in Ans. to Que.No.13, he again explained that from the meaning of 'fake', it only said that the purchase deal has been made at Rs.12.50 crores which has been duly accounted, instead of Rs.25 crores.
1.22. thereafter, on being asked question about the payments made to M/s.Seleno Steels Ltd, in Ans. to Que. No.14, the assessee said that total Rs. 4,26,24,000 has been paid and Rs.8.25 crores approx. is balance to be paid, which means, that total sales consideration would be Rs.12.50 crores approx., as per the statement recorded u/s 132(4) on 24-10-17. 1.23. thereafter, in Ans. to Que.No.19, the assessee again said that the purchase deal has been made at Rs. 12.50 crores to purchase the plant of M/s. Seleno Steels Ltd, and the alleged Ikrarnama is a draft one it may be prepared by any staff at initial stage of dealing; 1.24. that Shri Rajesh Agrawal (Seleno Group-the seller party) whose statement was also recorded on oath u/s132(4) on 24-10-17 to 26-10-17 in the factory premises who also said in Ans. to Que.No.54 that final deal has been made with Shri Sanjay Agrawal to sell the shares of Ws.Seleno Steels Ltd at sales consideration of Rs.12.50 croeres; and also agreed by both the parties that all 35 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal the statutory liabilities, like, income tax, sales tax, excise, GST, water tax and all other statutory dues up to the date 30-9-17 will be borne by the seller party and all future statutory liabilities on or after 1-10-17, will be borne by the purchaser group (i.e., the assessee-Group), in other words, in the month of Sep, 2017, there was income tax scrutiny assessment was pending for the AY 10- 11 before the ITO, Raigarh and income tax liability was expected to be created in the month of Dec, 2017, so it was agreed that any liability of income-tax or any other statutory liability, if created in future date on or after 1-10-17 which is related to earlier period, then, it will be borne by the Purchaser Group (i.e., the assessee-Group), and it is evident that Rs.6.2245 crores has been created demand of income tax in the month of Dec, 2017 and Rs.3.2469 crores, demand of income- tax penalty has been created by the ITO-Raigarh on M/s.Seleno Steels Ltd for the AY 10-11, and thus, this statutory liabilities of Rs.9.4714 crores are to be borne by the Purchaser Group (i.e., the assessee-Group), and thus, by considering this future/ contingent liabilities of income tax and other statutory liabilities to be created on the purchaser group, it was agreed between both the parties that the shares of M/s.Seleno Steels would be transferred to the family members of the assessee- Group at a total sales consideration of Rs.12.50 crores, which will be done after repaying the bank loan in the name of M/s.Seleno Steels Ltd, and that is the reason that Rs.6.08 crores has been accepted to give as loans & advance to the 'seller group' to repay the bank loan of M/s.Seleno Steels; and for this purpose, thereafter, 1.25. the first payment of Rs. 1,82,24,000 i.e., Rs.1,68,16,000 and Rs.14,08,000 to Smt Mamta Devi Agrawal and Mukesh Agrawal & family HUF respectively has been made/ given on 4-10- 17 as loans and advances to clear/ repay the bank loans of M/s.Seleno Steels Ltd and thereafter, 1.26. the second payment of 1,26,24,000 i.e., Rs.44,08,000, Rs. 58,16,000 and Rs.24,00,000 to Shri Rajesh Agrawal HUF, Shri Ramnivas Agrawal HUF and Smt. Rukmani Devi Agrawal respectively has been made/ given on 5-10-17 as loans and advances to clear/ repay the bank loans of M/s.Seleno Steels Ltd and thereafter, 1.27. the third payment of Rs. 3,00,00,000 to Smt. Abha Devi agrawal has been made/ given on 1610-17 as loans and advances to clear/ repay the bank loans of M/s.Seleno Steels Ltd., and thus, total payment of Rs.6,08,48,000 has been given as loans & advances to the seller group to repay the bank loan, and it was mutually agreed that after repaying the bank loan by the seller group, shares of M/s.Seleno Steels Ltd would be transferred at a total sales consideration of Rs.12.50 crores which inter alia includes the income tax liability to be raised in future, as expected by both the parties, for the AY 10-11, and thus, in these terms & conditions, the alleged deal has been finalized between both the parties as mutually agreed upon.
1.28. thereafter, in March, 2018, the purchaser party has repaid the bank loans in the name of M/s.Seleno Steels Ltd and thereafter, in April, 2018, on 25-4-18 (i.e., in the AY19-20), 12,71,997 shares of M/s.Seleno Steels Ltd has been transferred @ Rs.93/- per share to the members of the assessee-Group (i.e., the purchaser group) and Rs.11,82,95,721 has been paid as 'sales 36 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal consideration' of 12,71,997 shares of M/s.Seleno Steels Ltd in the AY 19-20, which also evident from the financial statements of M/s.Seleno Steels Ltd (now, M/s.NRVS Steels Ltd). 1.29. details of shares of M/s.Seleno Steels Ltd purchased by family members of 'NR Ispat Group' from the family members & associates of 'Seleno Steels Group' on 25-4-18 which is relevant to the AY 19-20, are given as under:
Sl. Name of buyer Name of seller Date of Number of shares Sales No. (NR Ispat (Seleno Steels transfer of transferred consideration Group) shares of shares Group) transferred (Rs.)
1. NR Ferro & Abha Devi 25-4-18 3,75,000 shares 3,48,75,000 Power P Ltd Agrawal @ Rs.93 per share
2. 25-4-18 15,000 shares 13,95,000 @ Rs.93 per share
3. 25-4-18 53,000 shares 49,29,000 @Rs.93 per share
4. NR Ferro & Economy Infra. 25-4-18 53,571 shares 49,82,103 Power P Ltd (P) Ltd @ Rs.93 per share
5. NR Ferro & Sector Infra. (P) 25-4-18 64,285 shares 59,78,505 Power P Ltd Ltd @ Rs.93 per share
6. Rajesh Agrawal Smt. Mamta Devi 25-4-18 2, 10,200 shares 1,95,48,600 S/o Nand Agrawal @Rs. 93 per share Kishore A
7. Rajesh Agrawal Mukesh Agrawal 25-4-18 17,600 shares 16,36,800 S/o Nand & Family, HUF @ Rs.93 per share Kishore
8. Vijay Agrawal Shri Rajesh Ag 25-4-18 84,400 shares 78,49,200 S/o Ramnivas Ag @ Rs.93 per share
9. Vijay Agrawal Aman Agrawal 25-4-18 4,180 shares 3,88,740 @ Rs.93 per share
10. Vijay Agrawal Shri Mukesh 25-4-18 28,100 shares 26,13,300 Kumar Agrawal @ Rs.93 per share
11. Vijay Agrawal Shri Ramnivas 25-4-18 86,300 shares 80,25,900 Agrawal @ Rs.93 per share
12. Vijay Agrawal Sanjay Gadodia 25-4-18 20,000 shares 18,60,000 @ Rs.93 per share
13. Sanjay Agrawal Shri Rajesh Ag, 25-4-18 55, 100 shares 51,24,300 HUF (Ramnivas) @ Rs.93 per share 37 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
14. Sanjay Agrawal Shri Ramnivas 25-4-18 72,700 shares 67,61,100 Agrawal, HUF @ Rs.93 per share
15. Sanjay Agrawal Smt. Rukamni 25-4-18 30,000 shares 27,90,000 Devi Agrawal @ Rs.93 per share
16. Sanjay Agrawal Ramnivas 25-4-18 40,000 shares Agrawal @ Rs.93 per share 37,20,000
17. Sanjay Agrawal Camllia Comm 25-4-18 10,761 shares 10,00,773 Ltd @ Rs.93 per share
18. Sanjay Agrawal Himadri Deal (P) 25-4-18 4,800 shares 4,46,400 Ltd @ Rs.93 per share
19. Sanjay Agrawal Satyam tradcom 25-4-18 14,000 shares 13,02,000 Ltd @ Rs.93 per share
20. Sanjay Agrawal Nandan 25-4-18 8,000 shares 7,44,000 Mercantiles (P) L @ Rs.93 per share
21. Sanjay Agrawal PNR Holding (P) 25-4-18 1,200 shares 1,11,600 Ltd @ Rs.93 per share
22. Sanjay Agrawal Rajesh Vanijya 25-4-18 2,800 shares 2,60,400 (P) Ltd @Rs.93 per share
23. Sanjay Agrawal Star Trafin (P) 25-4-18 1,400 shares 1,30,200 Ltd @ Rs.93 per share
24. Sanjay Agrawal Alexcy Tracon 25-4-18 5,120 shares 4,76,160 (P) Ltd @ Rs.93 per share
25. Sanjay Agrawal Shreevar 25-4-18 6,000 shares 5,58,000 Overseas Ltd @ Rs.93 per share
26. Sanjay Agrawal Sonal Tie-up (P) 25-4-18 2,880 shares 2,67,840 Ltd @ Rs.93 per share
27. Sanjay Agrawal Trident Lami- 25-4-18 5,600 shares 5,20,800 pack (P)Ltd @ Rs.93 per share Total: 12,71,997 shares 11,82,95,721 @ Rs.93 per share 1.30. now, income-tax liability of Rs.6.2245 crores & Rs.3.2469 crores of M/s.Seleno Steels Ltd for the AY 10-11, which was more or less existed as expected as on 1-10-17 by both the parties, for which, case was already reopened u/s 148 in the month of Mar, 2017 i.e., more than 7 months before the alleged deal of purchase, that burden to pay or to settle the liability is only in the hands of the assessee-group as agreed upon by both the parties as on 1-10-17 on handing over possession of the Plant of M/s. Seleno Steels Ltd, 1.31. and thus, after considering all the facts and circumstance and by fair estimating the incometax liability for the prior period (i.e., AY 10-11) from the date of deal, total sales 38 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal consideration was finalized at Rs. 12.50 crores for the shares of M/s. Seleno Steels Ltd, which has been materialized/ executed on 25-4-18 (i.e., in the AY 19-20) which comes in the AY 19-20 (PB-
Pg.10, 11); it means, there has not been any transfer of the plant of 'M/s.Seleno Steels' has been materialized in the AY 18-19 as alleged by the Id AO; this fact has also been evident from the statement recorded of the assessee on oath u/s 132(4) on 24-10-17 as well as the statement recorded of the seller on oath u/s 132(4) on 24-10-17 as well as the reply submitted by the seller before the Id AO during the assessment proceedings in response to the notice issued on 16-10-19 (assessment order, Pg. 7, 8);
1.32. Thus, there was no cash payments, as alleged/ misapprehended & presumed by the Id AO, has ever been made by the assessee in respect of the alleged deal of purchase of plant of Seleno steels'; that bank loan has been repaid by M/s. Seleno Steels only in the month of Mar, 2018 out of the loans & advances given by the assessee-Group of Rs. 6,08,48,000 in the month of Oct, 2017; that the seller party Shri Rajesh Agrawal has clearly stated in its reply submitted before the Id AO during the assessment proceeding that he has not received any such amount as alleged by the Id AO in the query raised on 16-10-19 (assessment order, Pg. 7, 8); 1.33. the ld AO has heavily relied upon a computer printout/ copy of draft 'agreement to sell' which is unsigned, undated, un-witnessed, seized from the premises of M/s.NR Ispat (PB-Pg.......) during the course of search, which on the face of it has been prepared by the assessee, had not been proceeded with as recorded; Secondly the alleged agreement does not have any identification of the land (i.e., 32.50 acres general land & 2.50 acres Adiwasi land) proposed to be bought, that means only a general area of land has been written and no specific details of land has been identified in the 'agreement to sell' as to which land has to be bought by the assessee; No detail of the seller is specified for the alleged unidentified land Of 32.50 acres general land & 2.50 acres Adiwasi land; who is the owner of the alleged unidentified land; and in the absence of the most important factor, i.e., land to be bought being not identify, no details of the owners of the land; the alleged 'agreement to sell' does not lend credence to the rest of the matter, and it is a kind of "dumb documents".
1.34. the assessee has not ultimately bought/ purchased the said unidentified land (i.e., 32.50 acres general land & 2.50 acres Adiwasi land) as per 'agreement to sell' and in that situation, it is highly improper to adopt the sale consideration on the basis of this proposal, draft, unsigned, undated, un-witnessed 'agreement to sell', which has not been acted upon, means, the alleged land of 32.50 acres & 2.50 acres as mentioned in the alleged 'agreement to sell' has not been transacted/ purchased by the assessee at all, means, both the parties i.e., seller & purchaser of the alleged 'agreement to sell' have not been acted upon on such 'draft agreement', and thus, it has not been materialized;
39 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal 1.35. there is no evidence has been found during the course of search with regard to any unaccounted cash payment involved in the purchase of aforementioned plant of M/s.Seleno Steels Ltd in the AY 18-19;
1.36. it is also a matter of fact that Shri Rajesh Agrawal, who is one of the party to the unsigned, undated, un-witnessed draft 'agreement to sell' has clearly said in the statement recorded on oath u/s 132(4) on 24-10-17 as well as in the reply submitted before the Id AO during the assessment proceedings, on being asked about the alleged 'agreement to sell', that plant has been sold at Rs.12.50 crores and he has not received any amount in cash in any manner from the purchaser party.
---After getting above reply from the alleged seller party i.e., Shri Rajesh Agrawal, it is very clear that the Id AO has duly accepted/ relied on the version of the seller party and duly convinced that the assessee has not paid any cash amount to the seller party up to the date of search i.e., 24-10-17;
---While, in the alleged draft 'agreement to sell', it is mentioned about proposal of giving advance of Rs.2.50 crores & again Rs.2.50 crores at the time of giving possession of 'plant' on 15-9-17, and since the alleged offer/ proposal has not been materialized for the reasons as mentioned above, the Id AO himself accepted that both the parties have not acted upon/ transacted on the terms and conditions as mentioned in the alleged offer/ draft agreement;
---the ld AO has accepted the fact that no land (i.e., 32.50 acres general land & 2.50 acres Adiwasi land) as mentioned in the alleged offer/ proposal/ draft 'agreement to sell' has been transferred/ purchased by the assessee;
---while on other side, he has arbitrarily assumed that the assessee has paid cash amount of Rs.2.10 crores to the alleged party in 3 installments of Rs.70 lakhs each, for which, he has not brought any independent corroborative material evidence on record to substantiate his baseless contention that Rs.2.10 crores have changed hands, and made addition of Rs.2.10 crores u/s69 treating it as unexplained investment which is not sustainable in the eyes of law, reliance is placed on:
Lavanya Land (P) Ltd (2017) (Bom HC) dt.23-6-17 397 ITR 246 Kulwant Rai (2007) (Del HC) dt.13-2-07 291 ITR36 Vatika Landbase (P) Ltd (2016) (Del HC) dt.26-2-16 383 ITR 320 Vivek Prahladbhai Patel (2016) (Guj HC) dt.6-11-15 138 DTR 158 Vivek Aggarwal (2015) (Del HC) dt.9-2-15 121 DTR 241 Ved Prakash Choudhary (2008) (Del HC) dt.19-2-08 305 ITR 245 Gian Gupta (2014) (Del HC) dt.8-5-14 369 ITR428 Naresh Khattar (HUF) (2003) (Del HC) dt.28-l-03 261 ITR 664 Dinesh Jain (Huf) (2013) (Del HC) dt.28-9-12 352 ITR 629 40 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal Manoj Mittal (2016) (Chd-Trib) dt.20-7-16 ITA No.393/Chd/2013 Raj at Agarwal (2012) (Jai-Trib) dt.9-l-12 144 TTJ 753 Sharad Chaudhary (2014) (Del-Trib) dt.25-7-14 165 TTJ 145 Smt Renu Agarwal (2017) (Jai-Trib) dt.14-2-l_7 185TTJ9 S Narayan Reddy (2014) (Hyd-Trib) dt.29-11-13 62 SOT 149 RP Import & Export PLtd (2015) (Chd-Trib) dt. 12-12-14 38 ITR(T) 436 Ms Priyanka Chopra (2018) (Mum-Trib) cit. 1-6-18 171 ITD 437
2.1. the allegations made by the revenue is not supported by actual cash passing hands; no material has been referred which would conclusively show that huge amounts in cash are transferred from one side to another; when the seller has been examined & he clearly denied about any cash receipts; no material evidence brought on record to substantiate the claim of the Revenue that extra cash has actually changed hands; there being no evidence to support the Revenue's case that a huge figure, changed hands between the parties, no addition could therefore, be made as held in Lavanya Land (P) Ltd (2017) 397 ITR 246 (Bom HC) dt.23-6-17, held as under:
"21. ...adverting to the fact that Dilip Dherai has retracted his statement, the Tribunal arrived at the conclusion that merely on the strength of the alleged admission in the statement of Dilip Dherai, the additions could not have been made. The concurrent findings of fact would demonstrate that the essential ingredients of sec69C enabling the additions were not satisfied. This is not a case of 'no explanation'. Rather, the Tribunal concluded that the allegations made by the authorities are not supported by actual cash passing hands. The entire decision is based on the seized documents and no material has been referred which would conclusively show that huge amounts revealed from the seized documents are transferred from one side to another. In that regard, the Tribunal found that the Revenue did not bring on record a single statement of the vendors of the land in different villages. None of the sellers has been examined to substantiate the claim of the Revenue that extra cash has actually changed hands. It is in these circumstances that the Tribunal found that on both counts, namely, the legal issue, as also merits, the additions cannot be sustained. Eventually, the Tribunal held as under:
"25. A perusal of the balance-sheet of the assessee show that the authorized, issued and subscribed paid-up capital is at Rs.l lakh and the assessee had not done any business during the year u/c. With such a small corpus and no business activity, nor any has been brought on record by the Revenue, it is not acceptable that the company may have incurred such huge expenditure outside its books of accounts. Further in his entire assessment order, the AO himself has pointed out time and again different persons, who are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assessee.
In our considerate view, there being no evidence to support the Revenue's case that a Lugg_Ügucg, whatever be its quantum, over and above the figure booked in the records and accounts changed 41 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal hands between the parties, no addition could therefore, be made u/s69C to the income of the assessee. Considering the entire facts brought on record, we have no hesitation to hold that even on merits, no addition could be sustained."
2.2. since the assessee had not signed the alleged 'Sauda Ikrarnama' found & seized, no liability can be attributed qua that agreement towards the assessee since he is not party to the agreement till he had signed the same, the mere fact that this agreement was found in the possession of the assessee does not lead us anywhere, more so, the alleged seller of the alleged 'Sauda Ikrarnama' has clearly denied the alleged cash components in the statement recorded u/s132(4) on 24-10-17 before the search team as well as in the reply given before the Id AO during the assessment proceedings in response to the notice issued on 16-10-19, addition is not justified on that count, as held in Kulwant Rai (2007) 291 ITR 36 (Del HC) dt. 13-2-07, wherein held as under:
"2. During the course of search one agreement to sell marked as AD-46 was seized from the premises of the assessee which was in respect of land situated at Daulatabad Road, Shivana, Gurgaon.
In this agreement it has been mentioned that an earnest money of Rs. 34,01,784 will be paid by the transferee to transferor at the time of signing of this agreement and the balance consideration of Rs.1,36,07,140 would be paid within the maximum period of 3 months, i.e., up to 16-4-01.
This agreement was duly signed by Mr.Jaswant Rai (vendor) and Sh.Anil Goel (vendee). Though the agreement was supposed to be signed by another transferor also, i.e., the present assessee, the assessee had not signed this agreement and it was left blank and at the time of seizure was lying with the assessee.
When the assessee was asked about this sale, he replied that this agreement was not executed and earnest money has not been received.
The AO had added 50% of the earnest money amount in the hands of the assessee on the ground that the money was equally shared by the assessee and his brother.
12. Coming to the facts of the present case with regard to the addition of Rs.17,00,892 made by the AO as undisclosed income of the assessee for the block period, we May refer to the findings of the Tribunal on this point and the relevant portion reads as under:
"we find that the addition has been made by the Id AO on the basis of surmises and guess work. He has ignored the fact that the agreement was found in the possession of the assessee. Had the vendee made substantial payment of Rs. 34,01,784 he would have taken care of not leaving the documents behind with vendors only. The Id AO has also ignored the fact that the agreement was 42 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal not complete, in as much as the assessee had not signed the agreement. The reasoning given by the Id AO is entirely guess work.
It is well settled legal position in respect of IT assessment proceedings that although strict rules of Evidence Agt do not apply to IT proceedings, assessments cannot be made on the basis of imagination and guess work. Reference in this respect May be made to Dhakeswari Cotton Mills Ltd (1954) (SC). We, therefore, direct deletion of the sum of Rs. 17,00,892 assessed by the AO by way of half share of the assessee in the alleged earnest money."
13. It is an admitted fact that the present assessee had not signed the agreement in question and since the assessee had not signed the agreement, no liability can be attributed qua that agreement towards the assessee since he is not party to the agreement till he had signed the same.
The mere fact that this agreement was found in the possession of the assessee does not lead us anywhere.
We find no hesitation in holding that this addition of Rs.17,00,892 made by the AO is based on surmises and guess work and on this point Dhakeswari Cotton Mills (1954) (SC), may be referred to, in which it is held:
"In making an assessment u/s23(3), the ITO is not fettered by technical rules of evidence and pleadings, and he is entitled to act on material which May not be accepted as evidence in a Court of law, but the ITO is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment u/s23(3)."
2.3. when the alleged 'Sauda Ikrarnama' found was only projections, an undated, unsigned and untested printout from the computer of an employee without linking the same with any actual transaction cannot constitute evidence detected as a result of the search which in turn would result in an addition of the undisclosed income; that in the absence of corroborative material, the additions made on the basis of sketchy documents which were unproved, cannot be sustained in law; in Vatika Landbase (P) Ltd (2016) 383 ITR 320 (Del HC) dt.26-2-16, held as under:
"26. With regard to issue of the alleged undisclosed receipt on sale of flats/ space in VT, the Tribunal deleted the additions made by the AO as sustained by the CIT(A) of Rs.5,60,73,380. The Tribunal held as under:
(ii) The CIT(A) ought not to have read the document seized from the computer of Mr. Awasthi piecemeal. If the paper is a projection for the other floors then it could not be used for determining the rate of alleged sold portion. Also, it did not mean that the portions were sold at that rate. (iii) There was no direct evidence available with the AO indicating the sale of flats @ Rs.4,600 or 43 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal Rs.4,800 per sq.ft. by the assessee in VT. On presumptive basis, it cannot be said that assessee has sold all the flats @ Rs.4,600 or 4,800 per sqft.
(iv) On a plain reading of the evidence it cannot be conclusively held that the assessee had received on-money or that the sale was made at a rate higher than the one recorded by the assessee in the document. (v) The AO did not call the vendees of the flats. He did not call Mr.Mrinal Nag for examination. He also did not make any other inquiry in order to corroborate his conclusion.
(vi) The CIT(A) erroneously retained the addition at Rs.5,60,73,380 on the basis of estimated projection made by Mr.Awasthi in the file of "cashflow/ Vatika Triangle" at page No.30 and 31.
34. Mr.CS Aggarwal, Id sr counsel appearing for the assessee, sought to support the impugned order of the Tribunal. Mr.Agarwal first submitted that the Tribunal was right in observing that CIT(A) erred in accepting only one part of document which was otherwise characterized as projections. Merely because the portion that was accepted indicated that flats on the second and third floors had already been sold, it did not mean that the flats were sold at the rates mentioned therein.
35. Mr. Agarwal further submitted that once the sheet is held to be a projection statement, it is to be treated as such for all purposes. He also pointed out that the area stated in the document for the third floor was 17,004 sq.ft whereas the actual area was 16,121 sq.ft.
Further, upto AY03-04, the fourth floor had also been sold but it was not indicated so in this document. The constructed area recorded in the sheet No. 10 was 1,30,425 sq.ft. whereas the total area sold was 94,671.09 sq.ft.
The other figures noted in sheet No.3 (corresponding to sheet No. 10) were only projections. Mr. Agarwal also pointed out the foot note on sheet No.3 indicated that "it is presumed that the building will be completed and fully let out in the month of Nov 2002." In the note it was observed that on the basis of-sheet No.4 that "anticipated sale proceeds of seven floors has been worked out at Rs. 47 crores."
All these indicated that these were only projections and were not sale figures. It is submitted that an undated. unsigned and untested printout from the computer of an employee without linking the same with any actual transaction cannot constitute evidence detected as a result of the search which in turn would result in an addition of the undisclosed income u/s 158B(b).
36. Mr. Agarwal pointed out that neither Mr. Sunil Awasthi nor any of the buyers were examined as although a request made was on behalf of the assessee. Once the assessee gave an explanation for the documents seized, the burden shifted to the Revenue to show the basis on which it could be said that the flats were sold at Rs. 3,250 per sq.ft.
44 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal Relying on Ved Prakash Choudhary (2008) (Del HC), it was urged that in the absence of corroborative material, the additions made on the basis of sketchy documents which were unproved cannot be sustained in law.
Reliance was also placed on Vivek Aggarwal (2015) (Del HC) to urge that unless the amounts stated in the documents were actually paid, it cannot be presumed that the amount mentioned in the sale deed was not correct.
40. Turning to the case on hand, the document recovered from the file in the computer of Mr. Awasthi, forms the basis of the addition made by the AO, which was further reduced by the CIT(A). This was in the form of a computer printout of three sheets which were unsigned and undated.
The first sheet was titled 'Cash-in-flow detail for the Revenue', the next was titled 'revenue details' and the third was titled 'Vatika Triangle, Guargaon.' The notes to the documents are indicative of their being projections.
Noting (i) states that "it is presumed that the building will be completed and fully let out in the month of Nov, 2002."
Another note states "Further, the sale of the building will took place over a period of nine months." Admittedly, as on the date of the search the construction was still in progress. Flats upto the fourth floor had been sold. The view taken by the Tribunal that mere fact that the printout states that the flats on second and third floors have been sold, does not necessarily mean that they were sold at the rates indicated therein is definitely a plausible view to take.
41. Considering that the document was recovered from the computer of Mr. Sunil Awasthi, he ought to have been summoned to explain the rates of sale shown therein for the flats on different floors. In fact, the assessee did make a request for his cross-examination. The other possibility was to examine the purchasers of the flats as they would have confirmed the price paid by them and how much of it was in cheque and what extent in cash. However, that too was not done.
42. In SM Aggarwal (Del HC), in similar circumstances certain slips of paper were recovered during search and their author was not examined. The Court observed:
"It is well-settled that the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. So, unless and until the contents of the document are proved against a person, the possession of the document or handwriting of that person on such document by itself cannot prove the contents of the document.
13. In Mahavir Woollen Mills (2000) (Del HC), during the course of search and seizure proceedings, certain slips were found, which, the AO concluded, contained details of payments beyond those which were made by cheques and drafts and were duly reflected in the books of 45 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal account. The assessee's stand before the Tribunal was that the documents were 'dumb documents' which did not contain full details about the dates of payment and its contents were not corroborated by any material and could not be relied upon and made the basis of addition."
45. As pointed out in SM Aggarwal (Del HC), the said document can at best be termed as a 'dumb' document which in the absence of independent corroboration could not possibly have been relied upon as a substantive piece of evidence to determine the actual rates at which the flats were sold. Further as pointed out in DK Gupta, merely because there are notings of offers on slips of paper, it did not mean that those transactions actually took place.
46. In the present case, there was again no material on the basis of which the AO could have applied a standard rate of Rs.4,800 per sqft for all the floors of VT. It was also not open to the AO to draw an inference on the basis of the projection in the document, particularly when the assessee offered a plausible explanation for the document. The burden shifted to the Revenue to show, on the basis of some reliable and tangible material......
47. In the circumstances, the Court is of the view that the Tribunal was justified in coming to the conclusion that the addition of Rs.5,60,73,380 made by the CIT(A) was not sustainable in law."
2.4. the assessee had never acted upon the agreement to sell; that pursuant to the agreement to sell, no sale deed has been executed in favour of the assessee; that Revenue had failed to bring on record any reliable material to prove that the assessee had made actual investment in cash of Rs.2.10 crores in the FYI 7-18, addition is unjustified on that count, as in Vivek Prahladbhai Patel (2016) 138 DTR 158 (Guj) dt.6-11-15, held as under:
"5. ...ld counsel for the assessee submitted that the evidence on record clearly reveals that though the agreement to sell was entered into on 18-1-05, it was never acted upon by both the parties. As per the agreement to sell, the assessee was to purchase 9 plots of land from the 3 brothers namely, Somabhai Prajapati, Vishnubhai Prajapati and Chandubhai Prajapati, but not a single plot was ever purchased by the assessee.
It was submitted that the agreement to sell was never acted upon and that in fact even the cheque for a sum of Rs.11 lakhs which had been handed over to the land owners at the time of execution of the agreement of sell was received back by the assessee and was cancelled. It was submitted that the assessee had never acted upon the agreement to sell and that on the mere statement made by Somabhal Prajapati to the effect that he had received money from the assessee, it could not be said that Revenue has established by way of evidence the payment of on-money on the part of the assessee.
It was submitted that when no sale deed has been executed in favour of the assessee, there was no reason as to why he would make payment of such a huge amount more so, when there was no relationship between him and the ultimate buyer Ajay Patel to whom the plots of land which were agreed to be sold to the assessee, were eventually sold.46 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal It was pointed out that the Revenue has failed to establish any connection between the assessee and Ajay Patel. It was contended that the Tribunal has duly appreciated the evidence on record and has recorded findings of fact on which it has based its conclusion, and that in the absence of any perversity shown in the findings recorded by the Tribunal, there is no warrant for interference by this Court.
...the ld counsel placed reliance upon PV Kalyanasundaram (2007) (SC), wherein, held that the fact as to the actual Sale price of the property, the implication of the contradictory statements made by the vendor or whether reliance may be placed on the loose sheets recovered in the course of the raid are all ques of facts and accordingly dismissed the appeal.
6. ...The facts as emerging from the record reveal that an agreement to sell came to be found during the course of search at the premises of the Prajapatis. Such agreement to sell was executed between the 3 Prajapati brothers and the assessee, namely, Vivek Patel. As per the statement of Somabhai Ambalal Prajapati recorded u/s132(4), the entire consideration in terms of the agreement to sell had been paid by a person/ representative of the assessee. However, a perusal of the record of the case shows that no further details have been stated by Somabhai as to who was the person who had come to pay the money and on which dates such amount had been paid.
It is an admitted position that pursuant to the agreement to sell, no sale deed has been executed in favour of the assessee and the plots of land which were agreed to be sold to the assessee have ultimately been sold to one Ajay Patel by way of registered sale deeds for a much lower consideration than that reflected in the agreement to sell. In the sale deeds executed in favour of Ajay Patel there is no reference to the agreement to sell executed in favour of the assessee, nor is the assessee a confirming party to such sale deeds.
Thus, the Revenue has failed to establish that the assessee had paid any on-money in terms of the consideration reflected in the agreement to sell.
A POA executed by Vishnubhai Prajapati in favour of the assessee in relation to one of the plots sold to Ajay Patel permitting him to take necessary steps for entering the name of Ajay Patel in the Revenue record is stated to be the link between Ajay Patel and the assessee Vivek Patel. In fact, it has been strenuously argued that the POA duly establishes the fact that the assessee knew Ajay Patel even prior to the date of the search 47 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal and, therefore, the submission that the assessee did not know Ajay Patel prior to the date of search is incorrect.
A perusal of the POA executed by Vishnubhai Prajapati in favour of the assessee indicates that the same only empowers him to carry out necessary procedures with the Govt office for transferring the property in the name of Ajay Patel.
However, such POA has been found in the possession of Vishnubhai Prajapati and not in the possession of the assessee Vivek Patel. Moreover, no material has been brought on record to demonstrate that such POA was ever acted upon by the assessee. Evidently, therefore, no material has been brought on record by the Revenue to establish any link between Ajay Patel and Vivek Patel or that they knew each other prior to the search. Thus, the Revenue has failed to establish that the assessee paid any money pursuant to the agreement to sell and has also failed to establish any link between the assessee and Ajay Patel.
7. The Tribunal, in the impugned order has found that the statements of Somabhai Prajapati and the assessee are contradictory. No material has been brought on record to substantiate the factum that the lands were sold to Ajay Patel at the instance of the assessee as claimed by Somabhai Prajapati. The Tribunal has further noted that Shri Somabhai in his statement has stated that the amount received by him from the actual purchasers at the time of execution of sale deed was returned by him to the assessee; however, no material was brought on record to show that the sale consideration received by Somabhai Prajapati was paid to the assessee.
The Tribunal found that according to Somabhai Prajapati while the agreement to sell was for 9 specific plots, subsequently 3 plots bearing No.540, 487 and 497 were exchanged in place of plots bearing No.512, 510 and 513; but no material had been brought on record to show that there was an agreement with the assessee for such exchange of plots.
the Tribunal has come to the conclusion that the Revenue had failed to bring on record any reliable material to prove that the assessee had made actual investment of Rs.3,25,51,000, Rs. 6,51,00,000 and Rs.48 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal 3,25,50,000 in the PYs relevant to AY 05-06, 06-07 and 07-08 respectively.
However, to the extent of Rs. 11 lakhs, the Tribunal was of the view that the agreement was material to conclude payment of such amount and that the assessee had failed to show that the amount of Rs. 11 lakhs was paid by him to of 30 Shri Somabhai Prajapati by cheque and not by cash and accordingly confirmed the addition to that extent for AY 05-06.
8. In the opinion of this Court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between the assessee and the sellers, which shows the price of the plots of land in que to be a much higher figure than the documented price and the fact that the sellers have stated that they have received higher amounts by way of on-money and have also shown receipt of such amount in their IT returns, the circumstances do raise a suspicion. However, as held by Daulatram Rawatmull (1964) (SC), even if circumstances raise a suspicion, suspicion cannot take the place of evidence.
2.5. when the alleged document is undated, unsigned, un-witnessed and no corroborations has been brought on record for the alleged cash payment of Rs. 2.10 crores, when on enquiry made by the Id AO, the alleged seller-Rajesh Agrawal has clearly denied for any such cash component, addition is unjustified on that count, as held in Vivek Aggarwal (2015) 121 DTR 241 (Del HC) dt. 9-2-15, held as under:
"9. The Tribunal, which endorsed the CIT(A)'s conclusions was of the opinion that since the letter was not addressed to anyone and both undated and unsigned, the Revenue was under the duty to corroborate whatever inference it wished to draw from it. The Tribunal reasoned as follows:
"There is nothing on record to show that any effort was made by the Deptt to establish the nexus of the assessee with the said printout by locating the person who had seen it and who was the recipient.
Undisputedly the print out is undated. No effort has also been made by the Revenue to corroborate the contents of the said 49 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal printout to arrive at a definite conclusion that the assessee was indeed drawing quantum of salary mentioned therein. As per the provisions laid down u/s132(4A), an adverse presumption can be drawn only when firstly the document was found from the possession of the assessee and secondly, the assessee was in the control over the said document. The ld CIT(A) has deleted the addition placing reliance on the above cited decisions with the conclusion that the seized printout of the e-mail was a dumb document in absence of name of the addressed and addressee and it was unsigned and undated."
12. In Kulwant Rai (2007) (Del HC) interestingly the ruling of Dhakeswari Cotton Mills Ltd (1954) (SC) was relied upon. The SC held that even though IT authorities including the AO has unfettered discretion and not strictly bound by the rules and pleadings as well as materials on record and is legitimately entitled to act on the material which may not be accepted as evidence, nevertheless such discretion does not entitle them to make a pure guess and base an assessment entirely upon it without reference to any material or evidence at all.
13. Given the above state of law- and this Court has no hesitation in so concluding, since the document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of the AO, the Tribunal's view which endorsed the findings of the CIT(A) is well-founded and do not call for interference."
2.6. when on the date of search on 24-10-17, the assessee has clearly stated in the statement recorded u/s 132(4) that deal of plant has been made at Rs. 12.50 crores and the alleged seller also in his statement recorded u/s132(4) on 24-10-17 duly stated/ affirmed on oath that the alleged deal has been made at Rs. 12.50 crores and further again, in his reply before the Id AO has clearly stated that no such cash amount has been received for the alleged deal and thus, both the parties have clearly denied about any cash transaction between them, then, without any independent corroborative material evidence brought on record by the revenue for its baseless contention, the alleged addition on that count is unjustified as held in Ved Prakash Choudhary (2008) 305 ITR 245 (Del HC) dt. 19-2-08, held as under:
"2. Briefly the facts of the case are that a search was conducted at the residence of the assessee on 10-2-00. During the course of search, 2 MOUs dt. 1-3-99 were recovered. These MOUs were entered into between the assessees, Ravi Talwar and Madhu Talwar. In terms of the MOUs, the assessee had paid Rs.25 lakhs each to Ravi Talwar and Madhu Talwar 50 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal towards part consideration for the purchase of agri-land valued at Rs.123.30 lakhs. The balance amount was to the paid on or before 30-4- 99, failing which the amount of Rs.25 lakhs each would be forfeited.
3. On the basis of the MOUs, the AO issued a quenaire to Ravi Talwar and Madhu Talwar regarding receipt of the amount of Rs.25 lakhs each, but while they both admitted having signed the MOUs, they denied having received any amount. The AO concluded that the denials by the assessee of having made payments and of Ravi Talwar and Madhu Talwar of having received the amounts was only to escape payment of tax liabilities. Accordingly, an amount of Rs.50 lakhs was added in the hands of the assessee u/s69 as unexplained expenditure.
5. The CIT(A) was of the view that all the parties had denied the transaction and in fact, the property in que was eventually sold by Ravi Talwar and Madhu Talwar to M/s.Delhi Tent and Decorators P Ltd, whose director gave a statement on 4-2-02 to the effect that he had purchased the agri-land in que from Ravi Talwar and Madhu Talwar. It was also held that in view of the denial of receipt of any money by Ravi Talwar and Madhu Talwar, there ought to have been some independent corroboration of the payment but there was no such material forthcoming.
6. Insofar as the Tribunal is concerned, it was of the view that as per the sec132(4A), there was a presumption about the correctness of the contents of the MOUs but relying upon PR Metrani (HUF) (2001) (Kar HC), it was held that the presumption was rebuttable. It was further held that the assessee had been able to successfully rebut the presumption.
8. The facts of the case make it very clear that there were 2 MOUs entered into by the assessee with Ravi Talwar and Madhu Talwar in respect of the purchase of agri-land. The 2 MOUs did record that 'the purchase consideration shall be Rs.123.30 lakhs. The purchaser having paid to the vendor the sum of Rs.25 lakhs part of the said purchase consideration as a deposit and shall pay the residual of said purchase consideration to the vendor on or before 30-4-99 when the purchase will be completed'.
9. Notwithstanding this, the assessee as well as Ravi Talwar and Madhu Talwar denied the money transaction.
In addition, thereto, the case set up was that the agri-land had, in fact, been sold to M/s.Delhi Tent and Decorators P Ltd, by Ravi Talwar and Madhu Talwar. This was confirmed by Shri NK Mittal, one of 51 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal the directors of Ws.Delhi Tent and Decorators P Ltd. Quite clearly, the MoUs did not fructify.
10. Sec132(4A) uses the expression 'it may be presumed'. It is not obligatory on the AO to make a presumption. Even if a presumption is required to be made, then, as held in SMS Investment Corpn (P) Ltd (1994) (Raj), the presumption is a rebuttable one and relates to a que of fact. While coming to this conclusion, the Raj HC relied upon an earlier decision rendered by it in SMS Investment Corpn (1988) (Raj).
12. Insofar as the present case is concerned, the assessee had stated that infact, there was no transfer of money between him and Ravi Talwar and Madhu Talwar. On the other hand, Ravi Talwar and Madhu Talwar had denied receipt of any money from the assessee. In the fact of these denials, there ought to have been corroborative evidence to show that there was in fact such a transfer of money. Both the CIT(A) as well as the Tribunal have come to the conclusion that there was no such material on record.
13. The AO relied on certain other transactions entered into by the assessee with Ravi Talwar and Madhu Talwar for drawing a presumption in respect of the transfer of money, but the Tribunal rightly held that those were independent transactions and had nothing to do with the MOUs, which were the subject-
matter of discussion.
Even if there was something wrong with some other transactions entered into, that would not give rise to an adverse inference insofar as the subject MOUs are concerned."
2.7. even the agreement was an unsigned document, there was not even an iota of evidence to establish the Revenue's contention that any unexplained investment in cash had been made by the assessee, addition made is unjustified as held in Gian Gupta (2014) 369 ITR 428 (Del HC) dt. 8-5-14, held as under:
"5. The Tribunal also examined this issue once again and came to the conclusion that as the transaction itself never took place, there would be no que of investment and, therefore, no que of any unexplained investment. The amount of Rs.l crore, which was paid by cheque, was returned as the transaction had fallen through. The Tribunal also took the 52 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal view that the onus was on the AO to establish that an investment of Rs. 1 crore in cash had been made. That onus was not discharged and, therefore, it could be concluded that an unexplained investment of Rs. 1 crore in cash had been made by the assessee. The exact findings of the Tribunal are as under:
"5. On due consideration of the above facts, we are of the opinion that the AO has given unnecessary weightage to the copy of MOU. The factum of transfer of a capital asset by Mrs Jind Singh in favour of the assessee was not established. The case of the assessee is that he has not purchased any land. The alleged MOU is a document exhibiting the negotiation of the purchase of land, but it never materialized. The AO has erroneously observed that it is for the assessee to establish that land was not purchased.
In our opinion, for charging the assessee with tax on account of unexplained investment, it is the AO who ought to have established that land was purchased by the assessee and he failed to disclose the source of such purchase. Instead of discharging this onus, Id AO treated a document as gospel truth and tried to put an onus upon the assessee to prove a negative fact which is not permissible in law. Ld FAA has rightly considered this aspect and deleted the addition."
6. After having heard the counsel for the parties on this issue of the deletion of the addition of Rs.l crore on account of the alleged unexplained investment, we are of the view that the CIT(A) and the Tribunal have deleted the said addition on examination of facts. In our view, no que of law arises for our consideration. The facts, as established on record, do not point conclusively to unexplained investment of Rs.l crore in cash by the assessee particularly because the MOU as well as the receipt in que were unsigned documents and the transaction had not materialized.
7. Insofar as the deletion of the addition of Rs.57 lakhs on account of the Udyog Vihar property is concerned, the difference is that there was not even an unsigned receipt nor any payment through cheque. Even the agreement was an unsigned document. The Tribunal found that there was not even an iota of evidence to establish the Revenue's contention that any unexplained investment in cash had been made by the assessee in respect of the 53 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal Udyog Vihar property. We are of the view that the findings of the Tribunal are also pure findings of fact and no que of law arises for our consideration on this aspect also."
2.8. the burden is on the Revenue to prove that the real investment exceeds the investments shown in the books of account of the assessee, as held in Naresh Khattar (HUF) (2003) 261 ITR 664 (Del HC) dt. 28-1-03, held as under:
"10. There is no gainsaying that to invoke sec 69B, the burden is on the Revenue to prove that the real investment exceeds the investments shown in the books of account of the assessee. As observed in KP Varghese (1981) (SC), to throw the burden of showing that there is no understatement of the consideration received, on the assessee would be to cast an almost impossible burden upon him to establish a negative, namely, that he did not receive any consideration more than what has been declared by him. Therefore, if the Revenue seeks to hold that the assessee has received more than what has been declared by him in respect of the assessment in que, the onus would lie on the Revenue to prove this fact by bringing some material on record.
11. In the instant case, the Tribunal has noted that before it the parties were ad idem that the addition in que was made only on the basis of the observations in the interim order passed by the Court in a civil suit between the 3 parties, including the assessee. We feel that the Tribunal was correct in holding that merely because counsel for the assessee made a statement in a civil Court that the total investment in the property wasRs.13 crores and odd, it would not be sufficient material to come to the conclusion that the said figure represents the actual investment. There has to be something more than that.
2.9. that Dinesh Jain (Hut) (2013) 352 ITR 629 (Del HC) dt.28-9-12, held as under:
"13. The error committed by the IT authorities in the present case is to jump the first step in the process of applying sec69B- that of proving understatement of the investment and apply the measure of 54 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal understatement. If anything, the language employed in sec69B is in stricter terms than the erstwhile sec52(2).
It does not even authorise the adoption of any yardstick to measure the precise extent of understatement. There can therefore, be no compromise in the application of the sec.
It would seem to require the AO even to show the exact extent of understatement of the investment; it does not even give the AO the option of applying any reasonable yardstick to measure the precise extent of understatement of the investment once the fact of understatement is proved. It appears to us that the AO is not only required to prove understatement of the purchase price, but also to show the precise extent of the understatement. There is no authority given by the section to adopt some reasonable yardstick to measure the extent of understatement. But since it may not be possible in all cases to prove the precise or exact amount of undisclosed investment, it is perhaps reasonable to permit the AO to rely on some acceptable basis of ascertaining the market value of the property to assess the undisclosed investment. Whether the basis adopted by the AO is an acceptable one or not may depend on the facts and circumstances of the particular case. That que may however arise only when actual understatement is first proved by the AO. It is only to this extent that the rigour of the burden placed on the AO may be relaxed in cases where there is evidence to show understatement of the investment, but evidence to show the precise extent thereof is lacking.
14. In Lalchand Bhagat Ambica Ram (1959) (SC), the SC disapproved the practice of making additions in the assessments on mere suspicion and surmise or by taking note of the notorious practices prevailing in trade circles. At the report, it was observed as follows:
"Adverting to the various probabilities which weighed with the ITO we may observe that the notoriety for smuggling foodgrains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every Arhatdar and grain merchant who might have been indulging in smuggling operations, without an iota of evidence in that behalf."55 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal This takes care of the argument of Mr. Sabharwal that judicial notice can be taken of the practice prevailing in the property market of not disclosing the full consideration for transfer of properties.
15. Since the entire case has proceeded on the assumption that there was understatement of the investment, without a finding that the assessee invested more than what was recorded in the books of account, we are unable to approve of the decision of the IT authorities. Sec 69B was wrongly invoked. The order of the Tribunal is approved."
2.10. since the assessee had not signed the alleged 'Sauda Ikrarnama' found, no liability could be attributed qua the agreement towards the assessee since he was not a party to the agreement till the assessee has signed the agreement; since the seized document is unsigned, therefore, no liability could be attached to the assessee, more so, the alleged seller of the alleged 'Sauda Ikrarnama' has clearly denied the alleged cash components in the statement recorded u/s132(4) on 24-10-17 before the search team as well as in the reply given before the Id AO during the assessment proceedings in response to the notice issued on 16-10-19, addition is not justified on that count, as held in Manoj Mittal (Chd-Trib) ITA No.393/Chd/2013, dt.207-16, wherein held as under: "5....search and seizure operation u/s132, was conducted on the residential/ business premises of Mittal Group of cases on 16-1-09. The document in A-5 was found in the possession of Shri Ashok Mittal at the residence; p.47- 56 being copies of agreement to sell between M/s. Sawan Land Developers (P) Ltd and a group of persons including the assessee for sale of 6 kanal, 6 and 1/6 maria at Kharar on 21-12-06 for Rs.1,90,00,000.
10. The assessee has filed copies of the seized documents i.e., agreement to sell in the PB, which did not bear signature of the assessee.
The assessee specifically pleaded before the CIT(A) that the document is unEjgggd. The AO has also placed, copies of the seized papers i.e., agreement to sell with the assessment order, which supports the contention of the assessee that it is un-signed agreement to sell. Since the assessee has not signed the agreement found during the course of search, no liability could be attributed qua the agreement towards the assessee since he was not a party to the agreement till the assessee has signed the agreement.
Kulwant Rai (2007) (Del HC) held as under:
56 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal "Held, dismissing the appeal, (i) that, admittedly, the assessee had not signed the agreement in que and since he had not signed the agreement, no liability could be attributed qua that agreement towards him since he was not a party to the agreement till he had signed the agreement. The mere fact that this agreement was found in the possession of the assessee did not lead anywhere. Thus, the addition of Rs. 17,00,892 made by the AO by way of half share of the assessee in the earnest money was based on surmises and guess work only and was liable to be deleted."
11. Since the document was found from the possession of Shri Ashok Mittal, brother of the assessee, therefore, it was duty of the Investigation Agency to find out the truth from Shri Ashok Mittal as to whom the document belong. Since the seized document is un-signed, therefore, no liability could be attached to the assessee.
12. Considering the totality of the facts and circumstances of the case in the light of material on record and in the light of Kulwant Rai (2007) (Del HC), no addition could be made against the assessee."
2.11. no evidence is there brought on record by the Id AO showing the payment of sum of Rs.
2.10 crores by the assessee in the FYI 7-18 to the alleged seller-Rajesh Agrawal; that the cash amount of Rs. 2.10 crores cannot be said to have been paid by the assessee only on the basis of the proposal/ draft agreement which is undated, unsigned, un-witnessed, more so, the alleged seller- Rajesh Agrawal, of the alleged 'Sauda Ikrarnama', has clearly denied the alleged cash components in the statement recorded u/s132(4) on 24-10-17 before the search team as well as in the reply given before the Id AO during the assessment proceedings in response to the notice issued on 16-10-19, addition is not justified on that count, as held in Rajat Agarwal (2012) 144 TTJ 753 (Jai-Trib) ITA No.834/Jp/2011; dt.9- 1-12, as under:
"9....We find that a loose paper and a draft agreement were found during the course of survey relating to the deal of purchase of plot No.C-166 in Tilak Nagar owned by M/s.Shah Buildcon (P) Ltd. Mr.Sanjay Suri and Mr.Rajendra Blana were the existing shareholders and directors of the company. The seller party in the draft agreement is M/s.Shah Buildcon (P) Ltd and the assessee is purchaser.57 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal As per these documents the assessee had paid a sum of Rs.11 lakhs as advance on 30-12-06 against total consideration of Rs.2,51,00,000. Out of balance amount, sum of Rs. 14 lakhs was to be paid by 20-1-07 and the balance amount of 2,26,00,000 has to be paid within 60 days. A perusal of the draft agreement shows that there are number of cuttings, corrections, hand written insertions etc. in the same and it is not signed by any of the parties.
The deal has been finalized by transferring of shares of M/S Shah Buildcon and not by transferring of the said plot by the company. In the signed agreement subsequently submitted by the assessee during the course of assessment proceedings, the consideration mentioned/ amount paid and to be paid are same but there were certain conditions of approval of map for housing project and construction of 17,000 sqft, which were to be fulfilled by the seller party before finally closing the deal. Application for such approval had already been made in the month of Sep, 2006 by the sellers. This agreement is between the existing shareholders/ directors of M/s.Shah Buildcon and the assessee. The assessee has also produced a revised agreement dt.14-3-07. In this agreement, as the sellers could not fulfill the conditions, the amount of consideration and the terms of payment were revised and the payments have been made according to the said terms which are verifiable from the books of account and other records of the company M/S Shah Buildcon (P) Ltd. A total of Rs.67 lakhs have been paid of which Rs.l lakh is paid by the new shareholders, Shri MP Agrawal, father of assessee, Smt.Shashi Agrawal, mother of assessee and Smt.Anchal Agrawal, wife of the assessee to the existing shareholders for purchase of shares and this fact is recorded in the share transfer register of the company placed in the PB.
The balance amount of Rs.66 lakhs has been paid by these 3 persons related to the company as unsecured loan which has been used by the company to repay the existing loan obligations towards the seller group. Taking into account the above facts, the Id CIT(A) found that the balance amount of Rs. 1.85 crores cannot be said to have been paid by the assessee only on the basis of the draft agreement and the papers found.
We further find that the agreements and the revised agreement cannot be denied merely for the reason that they were-not found 58 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal during the course of survey at the premises of assessee's company M/s.Gravita India Ltd.
The assessee claims that the same were there at his residence. The assessee's statements were not recorded during the course of survey otherwise he could have explained the complete facts at that time itself. Further, these agreement are written on the stamp papers issued prior to the date of transactions.
9.1. Further, as apparent from the statutory records of the company M/s.Shah Buildcon (P) Ltd, the said deal was finally closed in the manner written in the revised agreement. No evidence is there on record showing the payment of sum of Rs.1.85 crores by the assessee or his family members. The amount remaining to be paid in terms of the draft agreement also remained payable in terms of the signed agreement but the terms were subsequently revised and payment was made as per the revised terms. Moreover, the final payments were made on 14-3-07 i.e., after 75 days in terms of signed agreement as against 60 days mentioned in the draft agreement.
In view of these facts and circumstances of the case, we find that the Id CIT(A) has given a well reasoned and well founded order after dealing with each and every aspect of the issue and we are in full agreement with the findings of the CIT(A) that the addition of made by applying the sec69 is not justified."
2.12. when the seized 'Sauda Ikrarnama' which is undated, unsigned, un-witnessed, did not relate to cash payment of Rs.2.10 crores during the FYI 7-18, then in absence of any other supportive corroborative material evidence, this 'Sauda Ikrarnama' by itself was not found to be enough and justified basis to make addition; the seized 'Sauda Ikrarnama' which is papers being not corroborated by any independent evidence/ material cannot be considered as a reliable document as a proof of investment in alleged plant, as held in Sharad Chaudhary (2014) 165 TTJ 145 (Del-Trib) ITA No.933/De1/2012•, dt.25-7-14, held as under:
"22. The CIT(A) has also relied on Satyapal Wassan (Jab-Trib) wherein elucidating with respect to the same issue, the Tribunal has held as under:
"The crux of these decisions is that a document found during the course of search must be a speaking one and without any 59 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal second interpretation, must reflect all the details about the transactions of the assessee in the relevant AY. Any gap in the various components as mentioned in sec4 must be filled up by the AO through investigations and correlations with the other material found either during the course of the search or on investigation. As a result, we hold that document No.7 is a non-speaking document.
Next issue raised by the Id DR is that addition could be considered u/s68. In our considered view, this submission is misplaced. In fact it does not arise from the order of the AO. He has only made addition u/s 69 for the undisclosed advances given by the assessee. The que of treating them as cash credits is only an afterthought. The Deptt is not sure as to whether the alleged entries are payments or receipts. If the Deptt itself is vacillating and 2 interpretations are possible, then this fact itself justifies the stand of the assessee that no addition can be made."
23. From above decision of Tribunal Jabalpur, we note that a charge can be levied on the basis of document only when the document is a speaking one. The document should speak either out of itself or in the company of other material found on investigation and/ or in the search. The document should be clear and unambiguous in respect of all 4 components of charge of tax. If it is not so, the document is only a dumb document and no charge of tax can be levied on the assessee on the basis of a dumb document.
24. While granting relief for the assessee, the CIT(A) has also relied on Atam Valves (P) Ltd (P&H) wherein it has been held that:
"During the pendency of assessment proceedings, a survey was conducted by the Deptt u/s133A on 27-9-05 in the premises of the assessee and certain incriminating documents were found including a 'Slip Pad' containing payment of wages to various persons. The slips were written by Manoj Jain, an employee of the assessee who was confronted with the slips, apart from queing of the director Manoj Jain as well as director of the assessee explained the position as to how the slips had been written and the stand of 60 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal the assessee was that the same did not represent payment of wages during the year in que but were for the earlier year. However, the AO did not accept the explanation and made an addition. The CIT(A) as well as the Tribunal partly set aside the addition.
It was held that even though explanation of the assessee that the loose papers did not relate to payment of-wages during the year in que may not be accepted in absence of any other material, the loose sheets by itself were not enough to make addition as per estimate of the AO."
25. In this case the guiding ratio laid down by their Lordships is that when the loose papers did not relate to certain payment during the relevant period in que, then in absence of any other supportive material or evidence these loose sheets by itself were not found to be enough and justified basis to make addition.
26. In this case, it was also held that the seized papers being not corroborated by any independent evidence cannot be considered as a reliable document as a proof of investment in house property and accordingly, this kind of paper is liable to be ignored and addition made on the basis of this document is not sustainable.
27. In view of foregoing discussions, we are of the view that in the present case, the AO made addition on the basis of notings on Annex-A-1. As we have already stated and concluded earlier that on logical analysis of the notings contents of Annex-A-1, we reach to a conclusion that only Annex-A-l stand alone is not sufficient to draw an inference that the assessee made investment of Rs.
4,47,00,000 in purchase of land out of books of accounts and statement of investments and assets furnished before Revenue authorities by using income earned from undisclosed sources. We are also in agreement with the findings of the CIT(A) that the impugned document i.e., Annex-A-l is a dumb document as on logical analysis, neither the independent nor the collective meaning of the notings or entries written therein support the conclusion of the AO that the assessee made investment against Rs. 4,47,00,000 in purchase of land out of income earned out of books of accounts 61 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal from undisclosed sources in absence of any other supportive or corroborative evidence or materials.
We, therefore, are of the opinion that the notings and contents of Annex-A-l show noting of HH expenses made by the assessee out of drawings and cash withdrawn from banks and details about quantity and rates of battery. In absence of any supportive and corroborative material and evidence about location and measurement of the land and its seller (as per AO to whom sale consideration of Rs. 4,47,00,000 was paid by the assessee) from critical and logical analysis of remaining part of notings on Annex- A-1, maximum an inference may be drawn that the assessee noted details of proposal of a land deal nothing else.
28. On the basis of foregoing discussion and respectfully following the ratio of the decisions relied on by the CIT(A) and the assessee, we reach to a conclusion that the AO made addition on the basis of Annex-A-l on his own whims, surmises and conjectures and also by converting and moulding the contents of the impounded document to gather support for his baseless findings. We further hold that the Annex-A-l standalone cannot be used as a basis of making impugned addition without the company of any other supportive material and evidence. We, therefore, also hold that the AO made addition of Rs. 4,47,00,000 without any basis and justified reason which was rightly deleted by the CIT(A) by holding that the Annex-A-l is a dumb document which cannot be a basis for making addition in regard to investment in purchase of land out of income from undisclosed sources u/s 69. We are unable to see any ambiguity, perversity or any other valid reason to interfere with the conclusion and findings of the CIT(A) in the impugned order and we uphold the same."
2.13. the alleged seller Shri Rajesh Agrawal, which is party to the alleged 'Sauda Ikrarnama' which is undated, unsigned, un-witnessed, has clearly denied the alleged cash components in the statement recorded on 24-10-17 u/s 132(4) before the search team in Ans. No.54 and clearly recorded that the plant has been sold at Rs. 12.50 crores to Mr.Sanjay Agrawal as well as in the reply given before the Id AO during the assessment proceedings in response to the notice issued on 16-10-19, again he has stated that plant has been sold to Mr.Sanjay Agrawal at Rs. 12.50 crores only and no cash has been received in any manner in respect of the deal (assessment order, Pg. 7, 8); addition made by the Id AO merely on presumption & surmises without bringing any corroborative 62 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal material evidence on record to substantiate his baseless contention, is not justified on that count, as held in Smt. Renu Agarwal (2017) 185 TTJ 9 (JaiTrib) ITA N0.746/Jp/2014•, cit. 14-2-17, held as under:
"3.5. The Deptt carried out search and seizure operations on 22-9-10. After going through available records before us, the facts emerge that during the year u/c the assessee purchased a plot No.B-281, 10B Scheme, Gopalpura Bye Pass, Jaipur. This was a vacant plot which was purchased by the assessee for Rs.65 lakhs vide registered sale deed dt. 27-6-08. The Deptt found and seized the following documents in respect to purchase of this plot:** It is further noted that no statement of owner of the plot i.e., assessee was recorded by the search party. However, during the course of search the statement of husband of assessee Shri Ashok Agarwal was recorded on 22- 9-10 wherein in reply of Q.No.24 of the statement he surrendered the amount of Rs.76 lakhs as income. It is also noted that the copy of statements was provided by the AO on 10-3-11. Shri Ashok Agarwal retracted from search statement in respect to surrender of Rs.76 lakhs by filing sworn affidavit dt.10-3-11 before the AO on 11-3-11, immediately after the receipt of copy of statement on 10-3-11.
During the course of assessment proceedings, the AO made inquiries from the seller of the plot Shri Subhash Chand Bansal and recorded his statements on 7-2-13, wherein he stated on oath that he has received only Rs.65 lakhs against the sale of the plot. The seller Shri Subhash Chand Bansal had given a statement on oath that he had received Rs.65 lakhs only. The agreement with construction was cancelled and the cancellation agreement was also seized during the search operation.
The seller stated that there was no construction and no water and electric connection which is also established by Google earth Maps and photographs placed in the PB.
There is no evidence of payment of any on-money on the purchase of the vacant plot. No statement of assessee was recorded during search operation while she was present at the time of search. The cancellation agreement was found and seized during search operation itself. Therefore, its authenticity cannot be doubted when the Revenue had not been able to establish otherwise.
Therefore, looking to the present facts, circumstances of the case and the case laws relied on by the assessee, we find that the lower authorities have 63 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal erred in confirming the addition of Rs.76 lakhs on account of unexplained investment in purchase of Plot No.281, 10B, Gopal Pura Bye Pass, Jaipur."
2.14. the alleged 'Sauda Ikrarnama' is an unsigned, undated, un-witnessed dumb document, based on which no addition could be made without bringing on record any corroborative material evidence to substantiate the contents of such 'Sauda Ikrarnama', as held in S Narayan Reddy (2014) 62 SOT 149/(2014) 25 NYPTTJ 4872 (Hyd-Trib) ITAN0.291/Hyd/201•, dt.29-11-13, held as under:
"6. During the course of search operations, an unsigned and undated letter was found in the premises of Shri Ch.Srinivas, VP of DLF. On perusal of the said letter, the AO observed that the said letter-was written by the assessee; that an amount of Rs. 32 crores was paid by the assessee to the landlords and the claimant before the date of registration and that the assessee got back the said money from DEMI Realtors after registration of lands. When confronted with the said letter, the assessee, vide detailed explanation dt.5-12-09 submitted that the said letter was never written by him; and neither he paid Rs.32 crores in advance of the registration, nor subsequently got back the same from DEMI Realtors. The AO, however, was not convinced with the explanation of the assessee, and added the said amount of Rs.32 crores to the income disclosed by the assessee.
7. On appeal, the CIT(A) after due consideration of the detailed arguments of the assessee, observed that Shri C Srinivas, VP of DLF, from whose residence, the hand-written letter, which led to the impugned addition was made, was seized, in the statement recorded from him on the date of search, categorically stated that the said letter has not originated from the assessee and that the same was in fact drafted by Sri Srinivas himself. He also confirmed that it is his handwriting and it was written to the dictation of the Executive Director of DLF and the draft was given to M/s. Mali Florex to be written to DLF. The CIT(A) observed that there appears to be no direct involvement of the assessee to such unsigned letter found at the residence of Srhi Sriivas. With these observations, the CIT(A), deleted the addition of Rs.32 crores made by the AO, concluding portion of which reads as under:
"05. Shri Srinivas's assertion that he said letter noted in his diary is in his own handwriting; and that it is he who drafted the letter clearly explains the position. It should also be appreciated that the said assertion by Sri Srinivas was made on the very day and during the course of search proceedings and is not an exercise as a result 64 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal of afterthought. Thus, the presumption u/s 132(4A) should point to the fact that the assessee had no connection whatsoever with the said letter. In view of this veracity of the said unsigned letter was doubtful not only because it was seized from the premises of Sri Srinivas; but also on account of the fact that it was clarified by the person in whose writing the same was written that the said letter did not emanate from the assessee; it cannot be presumed that the assessee is the owner of the letter and the contents of that letter. Unless and until the said paper seized from elsewhere should be independently corroborated with contemporaneous record the said document does not carry any evidentiary value. It is also a fact that lands situated at Puppalguda village were dealt by Ws.Demi Realtors, but not the appellant."
Aggrieved by the action of the CIT(A) in deleting the addition of Rs.32 crores, Revenue is in appeal before us on this issue.
8. It is evident from the impugned order of the CIT(A) and other material on record that the document based on which the impugned addition of Rs.32 crores has been made by the AO is a dumb and unsigned document. The person from whose residence the said letter has been seized and, in whose handwriting, the same has been written, clarified the position that the said letter has no relation whatsoever with the assessee, and it was written by him to the dictation of his Executive Director, so as to have it issued by the assessee to DLF. That being so, in the absence of any corroborative evidence brought on record to disprove the version of Shri Srinivas, there is no scope for making any addition in the hands of the assessee.
Further, the letter in question is an unsigned dumb document, based on which no addition could be made without bringing on record any corroborative evidence to substantiate the contents of such letter. In this view of the matter, the CIT(A) in our considered opinion, was justified in deleting the addition made by the AO."
2.15. that (i) no identification of 32.50 acres & 2.50 adiwasi land as mentioned in the so called 'Sauda Ikrarnama'; (ii) bank loan has not been cleared up to the date 15-9-17 by the seller party as mentioned in the so called 'Sauda Ikrarnama'; (iii) stock of raw material & finished goods has not been reached at 'nil' level as on 15-9-17 as mentioned in the alleged 'Sauda Ikrarnama'; and thus, in other words, the alleged agreement did not have any proper identification of the land proposed to be sold; No specific property is mentioned in the 65 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal said agreement for the purpose of sale; No evidence has been brought on record if the said agreement to sell was acted upon by the concerned parties; the alleged addition of Rs.2.10 crores is based on merely suspicion that the assessee has might been paid the alleged amount in cash, the impugned addition is unjustified as held in RP Import & Export (P) Ltd (2015) 38 ITR (T) 436 (Chd-Trib) ITA No. 1135/Chd/2013, dt.12-12-14, held as under:
"7. ...The AO has relied upon the copy of the agreement to sell seized during the course of search operation, which has admittedly been cancelled by the parties by marking cross on the same. It is also admitted fact that the said agreement in que did not have any proper identification of the land proposed to be sold. No specific property is mentioned in the said agreement for the purpose of sale. No evidence has been brought on record if the said agreement to sell was acted upon by the concerned parties.
The seller to the agreement to sell or the witnesses to the agreement to sell have not been examined either by the search party or the AO. The assessee is admittedly not party to the agreement to sell in que and none of the persons related to the assessee-Co also connected with the said agreement in que.
No evidence has been found during the course of search to prove if any over and above consideration have been paid in respect of any property purchased by the assessee. During the course of search also, no adverse material was found against the assessee to justify any unaccounted investment made in any property.
Since the agreement in que is 'cancelled document' and did not relate to the assessee directly or indirectly, therefore, the AO has merely inferred that the assessee might have paid some more consideration over and above what is stated in the registered documents. It was merely the suspicion of the AO to make addition against the assessee. However, it is well settled law that suspicion, whatsoever may be strong, cannot take place of legal proof. In the absence of any adverse material against the assessee, we do not find any justification to interfere in the order of the Id CIT(A) in deleting the addition. The Depttal appeal thus, has no merit and is liable to be dismissed."66 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal 2.16. the assessee never purchased the alleged 32.50 acres of general land & 2.50 acre of adiwasi land as mentioned in the 'Sauda Ikrarnama' from the alleged seller; hence, the claim that it was a proposal later on not carried through and cancelled is having sufficient cogency; when scribbling in loose paper found on search and the same is a proposal which was not carried through cannot be brushed aside in light of the confirmation from the parties involved; as held in Ms Priyanka Chopra (2018) 171 ITD 437 (Mum-Trib), ITA No.4601/ Mum/2015•, dt.1-618, held as under:
"14. ...this addition has been made on the basis of loose papers found at assessee's premises numbered as page No. 114-117 of Annex-A-l showing cash payment of Rs.3.5 crores, out of an amount totaling to Rs.7.65 crores on account of purchase of commercial unit of 5,100 sqft from one M/s.Arjun Realtors (P) Ltd.
During the course of hearing the assessee has explained and substantiated with documents that such transaction was cancelled and not completed at all. It was only a proposal carried out through one broker, namely, Mr.Goldie Ahuja. The assessee also explained and substantiated that cheques issued to Mr.Goldie Ahuja for Rs.29 lacs and Rs.50 lacs were also cancelled as the proposal was not accepted by the assessee due to the involvement of cash component as proposed by the broker Mr. Goldie Ahuja.
Rather, since the assessee preferred to carry out all payments through cheque she went in for a smaller property at 2,995.79 sqft by paying the full amount of Rs.4.65 crores in cheque.
15. It was further explained as per loose papers found at assessee's premises numbered as page No. 109-113 of the same Annex-A-l which contains the details of allotment of premises by M/s.Arjun Realtors (P) Ltd which was agreed upon by the assessee for Rs.4.65 crores having an area of 2,995.79 sqft only which is much less than the area of 5,100 sqft offered earlier.
The assessee has substantiated this fact by submitting the agreement aggregating to Rs.4.65 crores showing the details of payments through cheque which are recorded in the books of accounts of the assessee.
16. Upon the assessee's appeal, the Id CIT(A) deleted the addition holding as under:67 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal "It is seen that the AO had relied only on page No. 114 for making addition, without taking cognizance of page No. 109 to 113 of the same Annex-A-l which also shows the details of the actual transaction.
Further, the retraction statement filed by the assessee's mother states that assessee has not made such cash payment to M/s. Arjun Realtors (P) Ltd which has not been considered by AO. It is seen that AO has not brought anything on record to substantiate the addition of Rs. 4.65 crores. Addition cannot be made on the basis of loose papers only which are not substantiated by documentary proof.
Therefore, the assessee's submission is accepted in light of SP Goyal (2002) (Mum-Trib) (TM) & PV Kalyanasundaram (2007) (SC)."
18. We note that this addition has been made by the AO on the basis of scribbling in loose sheets found in the course of search.
From the above document it is seen that the same is a scribbling for a real estate property of 5,100 sq.ft. total price this has been mentioned as Rs.7 cr 65. There is also mention of cash Rs.3.35 and cheque of Rs.2.15. In this regard, the assessee's case is that the said paper was only a proposal and was later on cancelled with the same party. The assessee entered into a new agreement for 2,995.70 sq.ft. for Rs.4.65 crores.
Assessee has duly submitted confirmation of payment and agreement for the new project. The cancellation of the cheques given for the earlier project have also been shown and confirmed.
The sole basis of this addition is the above said document found. In our considered opinion, the above said document cannot be said to be a conclusive proof of cash payment of Rs.3.5 crores.
The assessee's plea that the same is a proposal which was not carried through cannot be brushed aside in light of the confirmation from the parties involved. It is also on record that the assessee never purchased estate property of 5,100 sq.ft. from the said builder. Hence, the claim that it was a proposal later on not carried through and cancelled is having sufficient cogency.
68 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal In similar circumstances PV kalyanasundaram (SC) had affirmed the deletion of similar addition. Accordingly, in light of the aforesaid discussion and precedent, we do not find any infirmity in the order of the ld CIT(A)."
7. Backed by aforesaid submissions, it was the prayer by Ld. AR that the document found during the search was just a draft proposal which was unilaterally proposed by the assessee, whereas the actual deal was under
discussion, thus, the said document was undated, unsigned and unwitnessed. It was the submission that the document was shown / confronted to the sellers of the plant when the statement u/s 132(4) were recorded, wherein they have categorically denied of having any knowledge of such "Sauda-Ikrarnama", also no such document was found in the premises of sellers. The sellers have also stated that the sale of shares of their company was agreed for Rs. 12.50 crores, therefore, the amount of Rs. 25 crores emanating from the proposed "Sauda-
Ikrarnama" was just a ballpark figure, written hypothetically. Ld. AR further argued that many of the transactions intended in the alleged unsigned agreement were never crystalized like transfer of 32.50-acre General Land, 2.50-acre of Adivasi Land, this fact has duly appreciated by the Ld. CIT(A) in his order while accepting the contention of assessee that the alleged document was a dumb document. Another condition in the said document was that all the pending statutory dues / liabilities, pending returns / statements and any amount due 69 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal related to Income Tax, Sales Tax, Excise, GST, Water Tax & other statutory dues till 15.09.2017 shall be borne by the seller group, however, no such terms have been honored on the ground. The deal was actually completed with the payment of consideration through banking channel by way of purchase of shares of M/s Seleno Steel Ltd. by the family members of NR Ispat Group (Details furnished in the written submissions supra) for Rs.11,82,95,721/- towards sale consideration for 12,71,997/- shares. It was the submission that the proposed consideration of Rs.25 crores has been broken down and fairly reduced to Rs. 12.50 crores, considering the income tax liability of the seller group for Rs.6.2245 and 3.2469 crore for the AY 2010-11, which were taken over by the buyer to settle. It was the submission that as per para 1 of the alleged agreement the assessee being the seller was supposed to pay an advance of Rs. 2.50 crore to the buyers at the time of hand over on 15.09.2017, which actually was not paid by the assessee and the same was believed by the Ld. AO, thus, no addition was made on this account. It is the submission that there was no evidence for cash payments unearthed during the search, therefore, the allegation that unaccounted cash involved in the purchase was without any basis. Ld. AR argued that the addition made was under presumptions, arbitrarily without any corroborative material evidence on record that the amount of Rs. 2.10 have changed hands. Ld. AR placed his reliance on various judgments on this aspect referred to supra. It was the contention of Ld. AR that certain conditions of the proposed unsigned 70 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal agreement found during the search are not acted upon by the parties which is an admitted fact on the record accepted by the revenue, that the transaction of land was not materialized, liabilities were not settled by the sellers, advance amount of 2.50 crores was not paid by the assessee, moreover, the basis of addition that as per para 3 of the alleged document, the assessee was supposed to pay Rs.70 lac per month for 20 months to the sellers was not seriously believed and acted upon by the revenue, as no adverse action was taken or addition on this account was made by the department on the assessee in the subsequent assessment years, all such facts shows that the document found during the search was only a proposed draft, terms of which were under discussion and the same was not executed as such. It is further submitted by Ld. AR that the document which was a proposal not carried through or acted upon is nothing but a "dumb-document", out of which the revenue has picked-up certain conditions arbitrarily, under surmises with preconceived mindset to saddle the assessee with an addition for which no corroborative evidence regarding exchange of cash could be brought on record. Ld. AO have made the addition for monthly payments of 70 lacs in 3 months of the relevant AY but have not proposed or made any addition qua the remaining 17 future instalments, this fact also shows that the conviction of department that such cash transaction leading to addition on account of unexplained investment u/s 69 was only a presumptive inference but without any substantive material with them. Such action of the department itself proves that 71 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal the addition made in AY 2018-19 for Rs.2.10 crore was only on the basis of presumption, dehors any cogent, corroborative material on record. With such assertions, it was the prayer that the addition made by the Ld. AO was uncalled for, unjustified, arbitrary and illegal, thus, liable to be struck down. Ld. CIT(A) has, therefore, rightly deleted the addition in the interest on justice, hence the order of Ld. CIT(A) deserves to be sustained.
8. We have considered the rival contentions, perused the material available on record and case laws relied upon by the parties. On a thoughtful consideration of the facts, submissions, evidence and the arguments of both the parties, we may herein observe that during the search & seizure on the assessee, the document seized by the department titled as "Sauda-Ikrarnama" was drafted for acquisition of plant and machinery along with General land, Adivasi land, JCB, Loader, Bus, Hyva, Stores items, Plot, House, other assets/ liabilities etc. It is an admitted fact that the said document was undated, unsigned and unwitnessed, printed on a plan paper, having certain handwritten corrections (copy placed at PB 36-38, also reproduce in the assessment order). It is the fact borne from record that many of the terms and conditions from the alleged agreement were not acted upon, like transfer of 32.5-acre general land, 2.5 acres of Adivasi land, certain liabilities which were to be settled by the seller group, advance of Rs. 2.5 crore to be made at the time of hand over on 15.09.2017 and such position of 72 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal facts have not been disputed by the revenue. Apart from, such terms and conditions, which were not pursued by the parties, the income tax liability of the seller group have been taken over by the assessee (the buyer). The statement of directors of seller group recorded on oath u/s 132(4), wherein the alleged document was confronted, and explanation was sought, Mr. Rajesh Agrawal, seller had categorically refused to have knowledge of any such document and about any action based on terms & conditions therein, he answered that the consideration was agreed at Rs. 12.50 crores only. The Ld. AO was of the opinion that the response of Shri Rajesh Agrawal and Shri Sanjay Agrawal was contradicting in nature but was unable to expose such inconsistency, he placed his belief on the particular clause mentioned in the alleged agreement that the total consideration is Rs.25 crores, out of which Rs. 12.00 crores are to be paid by cheque and Rs. 13.00 crore to be paid in cash. Ld. AO had firmly picked para 3 of the alleged document "Sauda-Ikrarnama", that the seller will pay 20 instalments of Rs. 70 lac each to the buyer starting from 01.01.2018, accordingly, addition for first three months i.e., Jan 2018 to March 2018 amounting to Rs.2.10 crore was made in the relevant AY, treating the same as unexplained investment u/s 69 of the Act. It is further brought to our knowledge by the Ld. AR that no addition for remaining 17 instalments of Rs.70 lac have been ever made by the department in the ensuing years, whereas such contention was not objected by the revenue, it is therefore, observed that such inconsistent approach of the 73 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal department itself shows that the addition made in the year under consideration was with halfhearted conviction, as no corroborative material or evidence regarding cash payment could be brought on record by the revenue. It is clearly emanating from the aforesaid observations that the document found during the search i.e., "Sauda-Ikrarnama" which was unsigned, undated, unwitnessed, denied by the counter party, was just a loose paper having certain proposed transaction which were not carried out in toto, thus, the same constitutes a dumb-
document. Such dumb document was believed as a sacrosanct truth by the Ld. AO, though with respect to particular terms and conditions as per his convenience, brushing aside the remaining part of it. Admittedly, none of the parties either seller group or buyer group had admitted such cash transactions.
The allegation of cash transaction could not be substantiated by support of any independent incriminating material by the revenue; therefore, we concur with the findings of Ld. CIT(A), that the Ld. AO was not justify in making the additions simply on guess work and solely on the basis of a dumb document, we thus, approve the same and uphold the decision to delete the addition of Rs. 2.10 crore made by the Ld. AO.
9. In result, appeal of revenue in ITA No. 108/RPR/2020, stands dismissed, in terms of our aforesaid observations.
74 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
10. While the hearing in the aforesaid case was in progress, Ld. AR of the assessee have furnished, an application dated 14.04.2023 on 12.06.2023, seeking to raise a legal contention / ground, so as to challenge the validity of approval granted u/s 153D in the present case. The application submitted by the Ld. AR is extracted as under:
75 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal 10.1 Since we have approved the decision of Ld. CIT(A), wherein the entire addition made by the Ld. AO has been deleted in terms of our observations hereinabove, therefore, we refrain to deal with the aforesaid legal ground raised by the assessee challenging the validity of approval granted u/s 153D of the Act in the aforesaid application u/r 27, the same thus, is left as open.
11. CO No. 01/RPR/ 2021 (arising out of ITA No. 108/RPR/2020) by the assessee:
11.1 The grounds of appeal raised by the assessee in this CO are as under:
1. On the facts and circumstances of the case and in law, the ld CIT(A) has erred in not considering the fact that search assessment made u/s 143(3) rws153A is invalid, since approval granted u/s153D is in mechanical & routine manner without application of mind by Jt. CIT in a hasty manner, merely a formality, an empty ritual; in absence of valid approval as mandated by law u/s153D as per sec153B(1)(b), the alleged search assessment u/s143(3) rws153A be treated as invalid and is liable to be quashed.
11.2 As the appeal of the department in ITA No. 108/RPR/2020 against the deletion of addition by the Ld. CIT(A) is rendered as dismissed, in terms of our aforesaid observations. We refrain ourselves to adjudicate the ground in CO filed by the assessee challenging the validity of approval granted u/s 153D of the Act, the same therefore, is left as open.76 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021
Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal
12. In result, CO of the assessee in CO No. 1/RPR/2021, is partly allowed.
13. ITA No. 06 & 07/RPR/2021 13.1 The identical ground of appeal raised by the revenue in the aforesaid appeals is as under:
1. "On the facts and int he circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 1.5 crores, holding seized documents as dumb document, ignoring all the circumstantial evidences recorded by the Assessing Officer in the assessment order."
13.2 Since the issue qua the addition on the basis of alleged document i.e., "Sauda-Ikrarnama" has been decided by us in ITA No. 108/RPR/2020 in the case of DCIT vs Shri Sanjay Agrawal, the buyer, sustaining the order of Ld. CIT(A) deleting the addition made by the Ld. AO, wherein the document found was characterized as a 'dumb document' and the addition made on the basis of such document was deleted in absence of any cogent incriminating material to substantiate the allegation by the department regarding unrecorded transaction of cash payment by the sellers to the buyers. Consequently, addition made in the hands of buyers Shri Mukesh Kumar Agrawal and Shri Rajesh Kumar Agrawal for Rs. 1.05 Crores each, on the basis of the alleged "Sauda Ikrarnama" found from the premises of M/s NR Group (the buyers) which has been held as a "Dumb 77 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal Document" in our aforesaid decision in the case of Shri Sanjay Agarwal, the buyer(Supra), presuming that they have received 3 instalments of Rs.35 lac each in the month of Jan to March 2018, on the basis of the alleged dumb document i.e., "Sauda-Ikrarnama" without any supporting, corroborative evidence regarding the alleged cash payment. Further, similar amounts for remaining 17 months have not been considered as unexplained investment in the future period as no action was initiated or addition have been proposed by the department in the hands of sellers. In view of such facts and circumstances, we are of the considered view that Ld. CIT(A) had rightly vacated the addition, wherein his common observations qua both the assessee's under consideration i.e., Shri Mukesh Agrawal & Shri Rajesh Agrawal were as under:
4.1.7 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor any person has ever admitted about payment of cash of Rs. 1.05 crores by the appellant from the purchaser party. In absence of any corroborative evidence to prove that there was exchange of cash between purchaser and seller group, the AO has no locus to assume that appellant has received sum of Rs. 1,05,00,000/- in cash towards purchase of the said company. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborate. Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been 78 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lai Girdharilal v/s CIT (1954) 26 ITR 736 (SC).
14. In view of aforesaid observations, we affirm the view of Ld. CIT(A) on the similar lines in terms of our decision in the case of Shri Sanjay Agrawal, the buyer, in ITA No. 108/RPR/2020, therefore, the appeal of the department, ITA No. 06 & 07/RPR/2021 filed by the revenue against the assessees namely, Shri Mukesh Kumar Agrawal and Shri Rajesh Kumar Agrawal, the sellers, also stands dismissed.
15. CO No. 02 & 3/RPR/2021 (arising out of ITA No. 06 & 07/RPR/2021) by the assessee:
15.1 The common ground of appeal raised by the assessee in the aforesaid CO's are as under:
1. On the facts and circumstances of the case and in law, the ld CIT(A) has erred in not considering the fact that search assessment made u/s 143(3) rws153A is invalid, since approval granted u/s153D is in mechanical & routine manner without application of mind by Jt. CIT in a hasty manner, merely a formality, an empty ritual; in absence of valid approval as mandated by law u/s153D as per sec153B(1)(b), the alleged search assessment u/s143(3) rws153A be treated as invalid and is liable to be quashed.
15.2 As the appeal of the department in ITA No. 06 & 07/RPR/2021, challenging the decision of Ld. CIT(A), deleting the addition made by the Ld. AO, has been 79 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021 Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal rendered as dismissed, in terms of our aforesaid observations. We refrain ourselves to adjudicate the ground in CO's arising out of aforesaid departmental appeals, filed by the assessee raising a legal ground challenging the validity of approval granted u/s 153D of the Act, the same therefore, is left as open.
16. In result, COs of the assessee in CO No. 2 & 3/RPR/2021, is partly allowed.
17. In combined result, ITA No. 108/RPR/2020, ITA Nos. 06 & 07/RPR/2021 of the department are rendered as dismissed and the CO Nos. 01, 02 & 03/RPR/2021 of assessee are partly allowed, in terms of our observations and findings as depicted hereinabove.
Order pronounced in the open court on 16/08/2024.
Sd/- Sd/-
(RAVISH SOOD) (ARUN KHODPIA)
ाियक सद / JUDICIAL MEMBER लेखा सद / ACCOUNTANT MEMBER
रायपुर/Raipur; िदनांक Dated 16/08/2024
Vaibhav Shrivastav
आदे श की ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant-
2. थ / The Respondent-
3. आयकर आयु (अपील) / The CIT(A),
4. The Pr. CIT-1, Raipur (C.G.)
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur
6. गाड फाईल / Guard file.
80 ITA No. 108/RPR/2020, 06 & 07/RPR/2021 & CO Nos. 01,02 & 03/RPR/2021Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal // स या पत ित True copy // आदे शानु सार/ BY ORDER, (Assistant Registrar) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur