ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla IN INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA [Before Shri M. Balaganesh, AM & Shri K. Narsimha Chary, JM] I.T.A No.857/Kol/2014 Assessment Year: 2010-11 & I.T.(SS)A Nos. 34 to 37/Kol/2012 Assessment years: 2006-07 to 2009-10 Deputy Commissioner of Income-tax, Vs. Surya Prakash Bagla Central Circle-VII, Kolkata. (PAN: AEBPB4558F) (Appellant) (Respondent) & I.T.A. No.1418, 1411, 1419 & 1412/Kol/2012 & C.O. Nos. 145 to 148/Kol/2012 Assessment Years: 2006-07 to 2009-10 Surya Prakash Bagla Vs. Deputy Commissioner of Income-tax, Central Circle-VII, Kolkata. (Appellant/Cross Objector) (Respondent) Date of hearing: 10.08.2016 Date of pronouncement: 05.10.2016 For Revenue: Shri Niraj Kumar, CIT, DR For Assessee/Cross Objector: Shri J. P. Khaitan, Advocate & Shri S. Jhajharia, CA ORDER Per Bench: IT(SS)A Nos. 34 to 37/Kol/2012 and I.T.A. No.1418, 1411, 1419 & 1412/Kol/2012 and C.O. Nos. 145 to 148/Kol/2012 for Asst years 2003-04 to 2009-10 are arising out of common orders of CIT(A), Central-1, Kolkata vide Appeal Nos. 236-242/CC-VII/CIT(A)C- I/Kol/10-11 dated 6.8.2012 and separate order of CIT(A) for Asst Year 2010-11 in Appeal No. 172/CC-VII/CIT(A)C-I/13-14 dated 14.2.2014. Assessments were framed by DCIT, C.C.VII, Kolkata u/s. 143(3) of Income tax Act, 1961 (hereinafter referred to as Act ) vide his separate orders. For sake of convenience, we dispose of all above appeals and COs by this consolidated order. 2 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 2. General Facts brief facts of case that proceedings u/s 153A of Act was initiated consequent to search u/s 132 conducted on 25.2.2009 at residential and business premises of Saltee Group promoted and owned largely with his family members by Mr. Surya Prakash Bagla. assessee through its associate concern is engaged mainly in business of Real Estate & Civil Construction. Consequent to search u/s 132 of Act, notice u/s 153A of Act was issued for Asst Years 2003-04 to 2008-09 and assessments framed u/s 153A of Act thereon and for Asst Year 2009-10, being year of search, assessment was framed u/s 143(3) of Act. assessee s appeal is mainly containing validity of search and grounds of appeal in all years can be summarized as follows : 1. For that in view of facts and in circumstances, assessment order made by AO was wholly bad, illegal and void abinitio both on points of law and in view of facts and in circumstances ld CIT(A) was wholly unjustified in confirming action of AO as far as legal issues were concerned and Ld. CIT(A) was wholly unjustified in holding that there was no legal infirmity in assessment order of AO and in view of facts and in circumstances it may kindly be held that assessment order made by AO was wholly bad, illegal and void abinitio. 2. For that in view of facts and circumstances, assessment order made by AO is wholly bad, illegal and void abinitio since, a) order was made by AO without having assumed legal and valid jurisdiction u/s 127 of Income-tax Act on your appellant ; b) without making full and complete compliance required with reference to section 153C and without proper recording of satisfaction etc. since in respect of all additions made in hands of petitioner, papers and documents had been seized not from your appellant but from some other persons and hence AO was required statutorily to record satisfaction; and c) Search warrant / Panchanama being in Joint names of several persons and not in individual name of your petitioner only neither such search was valid nor such warrant was valid nor any assessment could not be made in name of your petitioner as individual only on basis of such Search warrant / Panchanama. 3. For that your petitioner craves right to raise additional ground or grounds of appeal on or before date of hearing and or to alter /amend/rectify present any ground or grounds of appeal. 3 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 2.1. ld AR during course of hearing did not press grounds towards validity of search in these appeals and same is taken as statement from Bar. Accordingly grounds raised on validity of search in various years are dismissed as not pressed and all appeals are adjudicated herein only on merits of each addition. 3. issues in these appeals are summarized ground-wise as follows and have been dealt accordingly :- Assessee's Seized Departmen appeal/C. material t's appeal O. Sl.N particula ITA/C.O. Grounds Grounds o rs No. Y Amount No. No. Fort transactio 2006 1 n 34/K/12 -07 6,00,90,000 1-5 - 2007 35/K/12 -08 1,40,00,000 1 5 - 2010 857/K/14 -11 7,40,90,000 1 4 - 34/K/12, 2006 2 SSG/1 145/K/12 -07 4,30,272 7 5 36/K/12, 2008 74,27,109( +) 147/K/12 -09 3,03,65,126 2, 3 & 4 5 Addl. Ground 1- 147/K/12 3 (C.O) Addl. Ground 1- 4(A's 1419/K/12 appeal) 35/K/12, 2007 3 SSG/3 146/K/12 -08 18,00,000 7 5 36/K/12, 2008 147/K/12 -09 37,25,000 5 6 37/K/12, 2009 148/K/12 -10 84,66,724 3 8 37/K/12, 2009 4 SSG/6 148/K/12 -10 6,00,000 4 9 - 4 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 34/K/12, 2006 5 SSG 9/39 145/K/12 -07 8,61,501 (+) 3,60,500 9 & 10 7 35/K/12, 2007 146/K/12 -08 6,94,299 8 6 36/K/12, 2008 147/K/12 -09 6,28,500 7 8 37/K/12, 2009 148/K/12 -10 86,257 7 11 34/K/12, 2006 6 SSG/8 145/K/12 -07 10,00,000 8 6 36/K/12, 2008 SSG/44 147/K/12 -09 50,000 6 7 37/K/12, 2009 1,67,000(+)27,03,31, 148/K/12 -10 000 5&6 10 Addl. Gr.1 (in 148/K/12 C.O) Addl. Ground 1 (In A's 1412/K/12 appeal ) 35/K/12, 2007 7 SSG/42 146/K/12 -08 50,64,383 9 7 2008 36/K/12 -09 5,89,47,000 8 - 2009 37/K/12 -10 45,456(+)1,30,00,000 9&8 - 35/K/12, 2007 8 SSG/45 146/K/12 -08 79,82,640 10 8 2008 36/K/12 -09 5,00,00,000 10 - 2008 9 SSG/48 36/K/12 -09 5,91,83,000 12 36/K/12, 2008 147/K/12 -09 1,85,08,949 11 9 37/K/12, 2009 148/K/12 -10 2,57,984 9 12 Jewellery, 10 Cash & 34/K/12, 2006 Bank 145/K/12 -07 65,300 6 4 35/K/12, 2007 85,863 / 67,411 6 4 5 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 146/K/12 -08 36/K/12, 2008 147/K/12 -09 69,882 1 4 37/K/12, 2009 148/K/12 -10 3,74,170(+)17,56,785 1&2 5, 6 & 7 4. ADDITION MADE IN RESPECT OF TRANSACTIONS WITH FORT GROUP: A.Y 2006-07: (Department s appeal ITA No. 34/K/2012) 1. Ground No. 1 Ld. CIT (A) erred in holding that Rs.6,00,90,000/- received by cash by Sri Bagla against sale of Shares of M/s. Graphitech India Ltd. is taxable in A.Y.2010- 11 and not in A.Y. 2006-07 as against CBDT Circular No. 704 dated 28/04/1995, which squarely fits in facts of Case. Applicant has not treated as cash receipt of Capital rather it has taken undisclosed income in A.Y.2010-11 2. Ground No. 2 - Ld. CIT(A) has erred in not appreciating fact that applicant Shri S.P. Bagla himself has not treated cash receipt of Rs. 6,00,90,000/- as Capital Gain from sale of shares, rather, he has taken it as undisclosed income from other sources in A.Y.2010-11. 3. Ground No. 3 - Ld. CIT(A) has erred in holding that capital gain arising on 100% sale of shares of M/s. Graphitech is taxable in 2010-11 and not in year in which MOU (contract for Sale) i.e. /F.Y. 2005-06 relevant for A.Y.2006-07 was signed and that order of Ld. CIT(A) is in contravention to circular No. 704 dated 28/04/1995 of CBDT. 4. Ground No. 4 -The Ld. CIT (A) erred in directing A.O. to take consideration as 14,01,00,000/- for sale of shares of Graphitech as against sale value of Rs. 6,51,00,000/- mentioned in MOU (sale contract) 5. Ground No. 5 - Ld. CIT (A) has further erred in holding that sale consideration for sale of shares is to be taken as Rs.14,01,00,000/- and date of sale as 25/05/2009. A.Y 2007-08: (Department s appeal ITA No. 35/K/2012) 1. Ground No. 1 - Ld. CIT (A) erred in holding that Rs. 14,00,00,000/- received in cash by Sri Bagla against sale shares of Graphitech Tech India Ltd. is taxable in A.Y. 2010-11 and not in A.Y. 2007-08 as against CBDT Circular No. 704 dated 28/04/1995, which squarely fits in to facts of case. 2. Ground No. 2 - Ld. CIT(A) has erred in not appreciating fact that applicant Shri S.P.Bagla himself has not treated cash receipt of Rs. 1,40,00,000/- as Capital Gain from sale of shares , rather, he has taken it as undisclosed income from other sources in A.Y.2010-11. 6 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 3. Ground No. 3 - Ld. CIT(A) has erred in holding that capital gain arising on 100% sale of shares of M/s. Grahitech is taxable in 2010-11 and not in year in which MOU (contract for Sale) i.e. /F.Y. 2006-07 relevant for A.Y.2007-08 was signed and that order of Ld. CIT(A) is in contravention to circular No. 704 dated 28/04/1995 of CBDT. 4. Ground No. 4 - Ld. CIT (A) erred in directing A.O. to take consideration as 14,01,00,000/- for sale shares of Graphitech as against sale value of Rs. 16,51,00,000/- mentioned in MOU (sale contract) 5. Ground No. 5 - Ld. CIT (A) has further erred in holding that sale consideration for sale of shares is to be taken as Rs. 14,01,00,000/- and date of sale as 25/05/2009. A.Y 2010-11 Department s Appeal - ITA No. 857/Kol/ 2014 grounds of appeal as emerging out of order of Ld. CIT(A)/ C- 1 are as under : 1. That on facts and in circumstances of case Ld. CIT(A), Central I, Kolkata has erred in relying on CIT(A), C-I s earlier order No. 236-242 /CC-VII/CIT(A), C- I/10-11 dt. 16.8.2012 for A.Y 2003-04 to 2009-10 which has not yet reached finality as department has preferred further appeal before Hon ble ITAT. 2. That on facts and in circumstances of case Ld. CIT(A), Central I, Kolkata has erred in holding that undisclosed receipts Rs. 7,40,90,000/- should be treated as Capital Gain instead of Income from other sources . 3. That on facts and in circumstances of case order passed by Ld. CIT(A), Central I, Kolkata is not only erroneous but prejudicial to law. 4. appellant craves leave for reserving right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during hearings. 4.1. brief facts of this issue is that Saltee Infotech Pvt Ltd was holding 100% shares in M/s Graphitech India Ltd, company incorporated under Companies Act, 1956. One Mr. Surya Prakash Bagla (assessee herein) is its director. M/s Graphitech India Ltd has long term lease on piece of land measuring about 60 cottahs and there was no legal impediment to construct commercial building on said land. There was Memorandum Of Understanding (MOU) on 4.8.2005 between Saltee Infotech Pvt Ltd represented by its Director Mr. Surya Prakash Bagla and one Mr. Vivek Kathotia, with recital that shareholders of M/s Graphitech India Ltd went to transfer their 100% holding in M/s 7 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla Graphitech India Ltd to Mr. Vivek Kathotia for consideration of Rs. 16,51,00,000/-. In said MOU there was recital to effect that all original share certificates and transfer deed shall be deposited with Mr. B. K. Jain Advocate in trust and same shall be handed over to transferee on making their full and final payment of consideration amount. Further, vide clause 4 in liabilities and responsibilities of transferor, it was stipulated that transferor at his cost and efforts, shall be responsible to get building plans which shall be prepared by transferee, sanctioned from concerned authorities and also obtain all other permissions which shall include clearances from departments of Fire, Airport Authority, Pollution Control Board, Water & Sewerage etc. as may be essential and necessary to enable transferee to construct and complete building on said land without any problem. Further vide clauses 13 and 14 thereof it was stipulated that Transferor has assured Transferee that it shall get plan sanctioned, prepared as per prevailing rules and regulation of competent authority of different Govt. department of govt of West Bengal & Central Govt. Bidhannagar Municipality have sanctioned plan up to height of 75 metres and/or more subject to NOC from Airport Authority of India. Transferor has assured to get plan sanctioned upto maximum height of 75 metres mentioned hereinbefore. If Transferor fails to get plan sanctioned then transferor shall refund entire amount received from Transferee within one month. Transferor shall, at his cost and responsibility get lease deed modified from Urban development (UD) department, to extent that land can be used for construction of building for use of information Technology Industry. Vide clause 4 of consideration part, it is stated that consideration amount shall be paid to share holders of Graphitech and this will be valid discharge of payment. 4.1.1. Out of sale consideration Rs.16.51 cr., sum of Rs.6,00,90,000/- was paid in AY 2006-07 and Rs.1,40,00,000/- was paid in AY 2007-08 towards Cash portion. Subsequently, transferor pleaded that Municipality refused to sanction plan prepared by transferee for its I.T complex and ultimately transferee decided to abandon project, and accordingly, about 1st week of February, 2007 parties mutually agreed to rescind contract and to release each other from obligation there under. At that time large amounts remained outstanding to transferor and others in relation to sale and purchase of shares. 8 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 4.1.2. Saltee InfoTech filed Title Suit No. 216 of 2007 in court of Civil Judge, Senior Division, IInd Court, at Barasat seeking decree declaring memorandum dated 04.08.2005 as terminated with mutual consent, letters dated 01.11.2007 and 19.11.2007 as void, delivery up and cancellation of such letters and decree for perpetual injunction restraining transferee from demanding delivery of possession of shares and from giving effect to MOU dated 04.08.2005. In said suit it was pleaded that pursuant to MOU original share certificates were deposited with Advocate Shri B. K. Jain and subsequently all steps were taken to see that terms of MOU are implemented, but inspite of various corrections made from time to time to building plan got prepared by transferee, same could not be accomplished and Bidhannagar Municipality refused to approve plan as such, transferee ultimately decided to abandon project and with mutual consent, contract was rescinded but to surprise of transferor, letter was received from Mr. B. K. Jain, Advocate, wherein rescinding of contract was disputed and delivery of shares was insisted. In those circumstances, declaratory suit came to be filed. 4.1.3. transferee also filed another suit in T.S. No. 222 of 2007 before Civil Judge (Sr. Division), 2nd Court at Barasat disputing recession of contract and praying for specific performance thereof. According to transferee, after receipt of substantial amounts, transferor with oblique motive alleged that there is rescinding of contract with mutual consent. According to them, only sum of Rs.2,59,10,000/- was due and sum of Rs. 13,91,90,000/- was paid from time to time as such transferee demanded delivery of shares. According to transferee, by incurring huge expenditure they got building plan prepared and cooperated with transferor to get them approved by Municipality and according to them, such building plans were almost approved and at final stage of receiving amounts and issue formal sanction letter. However, it was effectively thwarted by transferor only to concoct story of non approval of plans by Municipality. He further alleged that for first time by way of letter dated 22.11.2007 Mr. B. K. Jain, Advocate informed transferee that transferor deposited only share certificates but no share transfer deeds. In these circumstances, specific performance of contract was prayed for. 9 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 4.1.4. While matter stood thus, there was search and seizure operation at premises of Saltee Group of companies on 25.2.2009 by Income Tax Department u/s 132 of Act including residential and business premises of assessee. Subsequently, parties entered into settlement pursuant to which T.S No. 216 of 2007 was dismissed and other TS No. 222 of 2007 was decreed. Under terms of settlement transferor agreed to transfer 100% shares except 30 shares to transferee, handover all papers, books etc., transferee has to pay Rs.2,59,10,000/- to transferor whereas transferor had to pay Rs.2,50,00,000/- to transferee towards cost of litigation, compensation etc. as such after adjustment of amounts, transferee paid sum of Rs.9,10,000/- to transferor etc. This was implemented by both parties pursuant to decree. 4.1.5. Now questions are when transfer of shares took place and what is actual sale consideration for purpose of reckoning Capital Gains? According to CBDT Circular No. 704 dated 28.04.1995 with reference to section 2(42A) of Act, Board, in case of transactions take place directly between parties and not through stock exchanges, date of contract for sale as declared by parties shall be treated as date of transfer, provided it is followed up by actual delivery of shares and transfer deeds. In view of this circular, date of contract for sale assumes importance. According to revenue, date of contract for sale is date of MOU whereas, according to assessee, date of subsequent compromise by way of which condition as to approvals by different authorities was got rid of. Further according to Revenue, sale consideration is entire Rs.16.51 Cr whereas Assessee claims it to be only 14.01 Cr as reduced in compromise decree by way of adjustment. 4.2. assssee offered capital gains for sale of shares in Asst Year 2010-11 on basis of transfer of shares that happened pursuant to decree and revised MOU dated 25.5.2009. assessee also offered sums of Rs. 7,40,90,000/- in revised return for Asst Year 2010- 11 under head income from other sources being cash component received on sale of shares. But during course of assessment proceedings, assessee pleaded before ld AO to treat sums of Rs. 7,40,90,000/- as part of share sale consideration and assess capital gains accordingly. This request was rejected by ld AO. ld AO ultimately framed assessments for Asst Years 2006-07 and 2007-08 by adding sums of Rs. 10 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 6,00,90,000/- and Rs. 1,40,00,000/- respectively and capital gains in Asst Year 2010-11 as disclosed by assessee by taking consideration at Rs. 16.51 crores and assessed sums of Rs. 7,40,90,000/- as income from other sources for Asst Year 2010-11 as disclosed in revised return by assessee. 4.3. ld CITA in his order appreciated contentions of assessee and deleted additions of Rs. 6,00,90,000/- and Rs. 1,40,00,000/- made by ld AO in Asst Years 2006- 07 and 2007-08 and also held that same are to be treated only as advance received by assessee against share sale consideration and further held that capital gains arose only in Asst Year 2010-11 as per compromise decree entered into and revised MOU dated 25.5.2009. 4.4. It is argument of learned DR that parties intended transfer of particular number of shares of particular company for particular consideration and ultimately same thing happened even after Court recording compromise decree, as such for all practical purposes, what was enforced is only MOU dated 4.8.2005, as such date of contract for sale is 4.8.2005 only. He further argued that what is specifically enforced by way of compromise decree is MOU dated 04.08.2005 and all terms of compromise reached by parties are nothing but reaffirmation of terms of MOU dated 04.08.2005. In respect of consideration his argument is that all along sale consideration remained same, because of intervening litigation, transferor was fastened with liability to pay compensation to transferee at Rs.2,50,00,000/- and it is only by way of adjustment, amount payable had come down but as matter of fact, there was no reduction in sale consideration. He submits that parties never intended to reduce sale price of shares but there is agreement to pay compensation of sum of Rs.2.5 cr. which liability does not arise with reference to price of shares as stated in MOU, but arose due to intervening litigation. Since transfer could not have materialized in absence of payment of such compensation it forms part for sale consideration. According to him, sale consideration remained same although transaction but liability of transferor for compensation only intervened. He, therefore, argued that date of MOU is date of contract for sale and sale consideration is entire amount of Rs.16,51,00,000/-. On this premise, Ld. Counsel argued that sale consideration of shares of assessee is Rs.16.51 cr. and following CBDT circular 704 dated 28.04.1995, such date (i.e date 11 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla of MOU dt 4.8.2005) will be treated as date of transfer, since, it is only pursuant to terms of MOU, delivery took place. He placed reliance on decision reported in AJAY GULIYA vs. ASSISTANT COMMISSIONER OF INCOME TAX (2012) 209 TAXMAN 0295 (Del) wherein it was observed that,- reasoning of Tribunal is premised upon fact that capital assets were transferred on particular date assessee passed on execution of agreement. There is no material on record or in agreement suggesting that even if entire consideration or part is not paid title to shares will revert to seller. In that sense controlling expression of "transfer" in present case is conclusive as to true nature of transaction. fact that appellant assessee adopted mechanism in agreement that transferee would defer payments would not in any manner detract from chargeability when shares were sold. 4.5. It is argument of Ld. AR that MOU dated 04.08.2005 came to end with rescinding thereof by parties with mutual consent and also when it was substituted by de novo contract by way of compromise decree. He further submitted that as per agreement in compromise decree, Rs.2.5 cr. was adjustable against balance sale consideration of Rs.2.591 cr. as such, to extent of Rs.2.5 cr. sale consideration was reduced and this amount alone has to be reckoned and in year of compromise decree. Reliance is placed on decision reported in COMMISSIONER OF WEALTH TAX vs. BABULAL JATIA (DECD.)137 ITR 540 (Cal) When shares in joint stock company were subject-matter of transfer, provisions of Transfer of Property Act, were not conclusive and it should be seen whether there was transfer in accordance with provisions of Companies Act and transfer of interest in shares from transferor to transferee was independent of requirement of its registration for purposes of Companies Act. Further reliance was placed on decision in case of CIT vs. Bhaskar Mitter reported in (1994) 73 Taxman 437 (Cal) at para 8 at p. 442 referred in MAYNAK PODDAR (HUF) vs. WEALTH TAX OFFICER (2003) 262 ITR 0633. In this decision, this Court observed : "....... assessee is liable to pay tax only upon such income as can be in law included in his total income and which can he lawfully assessed under Act. law empowers ITO to assess income of assessee according to law and determine tax payable thereon. In doing so, he cannot assess assessee on amount, which is not taxable in law, even if same, is shown by assessee. There is no estoppel by conduct against law nor is there any waiver of legal right as 12 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla much as legal liability to be assessed otherwise than according to mandate of law (sic). It is always open to assessee to take plea that figure, though shown in his return of total income, is not taxable in law. ........" 4.6. Ld. AR in his rejoinder drew our attention to Circular relied upon by ld AO which is placed at page 257 of paper book No. 2 and pointed out that even as per Board s Circular, taxability of shares arise only in year of transfer of share certificates. ld AR took us to pg 48 of PB No. 2 which is MOU dt. 4.8.2005 and in consideration part of such MOU at Clause 5 it has been categorically mentioned that share transfer deed were to be deposited with Mr. B. K. Jain (Advocate) in trust and were transferred to transferee (i.e. Vivek Kathotia) only on full and final payment of consideration. ld AR further took us to letter written by assessee to Solicitor Mr. B. K. Jain (Paper Book No.2 page 48) which shows that Solicitor was holding such share certificates only in trust in terms of MOU dt. 4.8.2005 and shares were never transferred to Mr. Vivek Kathotia and/ or his assignees/ associates as mentioned in MOU. ld AR further took us to ROC returns for Asst Years 2006-07 & 2007-08 as well as for Asst Year 2010-11 which are placed at pages 151 to 245 of Paper Book No.2 and contended that since share certificates have been transferred by assessee and recorded in Financial Year 2009-10 relevant to Asst Year 2010-11, fact so contended by ld DR is not correct and in terms of Circular No. 204 itself transfer had happened only in Financial Year 2009-10 relevant to Asst Year 2010-11. ld AR further contended that value of consideration at Rs. 14,01,00,000/- is in terms of direction of Court only and accordingly has been considered by ld CITA at Rs. 14,01,00,000/- only. ld AR took us to page 134 along with page 136-137 of paper book No.2 which is part of compromise decree given by Barasat Court and as such this is fact emanating from records only. ld AR further contended that since same is taxable as capital gain only ld CITA is right in treating same as assessable in Asst Year 2010-11 in head capital gain and not as income from other source shown by assessee in such year. 4.7. We have heard rival submissions and perused materials available on record including paper book containing all relevant documents with regard to this addition. 13 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla It is not in dispute that there was MOU between parties. Consideration was ascertained and part is payable in installments. One of terms of MOU is that transferor shall be responsible to get building plans, which shall be prepared by transferee, sanctioned from concerned authorities and also obtain all other permissions which shall include clearance from departments of fire, Airport Authority, Pollution Control Board, Water and Sewerage etc as may be essential and necessary to enable to Transferee to construct and complete building on land without any problem. Consideration amount to tune of Rs. 13,26,00,000/- was payable by November, 2005 and balance consideration of Rs.3,25,00,000/- has to be paid on receiving sanction plan together with all other essential clearances from all concerned departments as are required, and receiving all original documents, papers, account books, statutory registers etc., 4.7.1. Irrespective of fact of payment and receipt of amounts and apart from readiness and willingness of parties, performance of contract by either of parties is dependant on permissions and sanctions to be granted by third parties like departments of fire, Airport Authority, Pollution Control Board, Water and Sewerage etc, and till permissions are granted, neither of parties will be in position to perform or demand performance of contract from other party. By way of stipulation in MOU by way of Clause 13 thereof, viz, if Transferor fails to get plan sanctioned then transferor shall refund entire amount received from Transferee within one month, parties adopted mechanism in MOU that till transferor gets required permissions and clearances, amounts paid by transferee would remain as advance only, and it is only on accomplishment of this pre requisite condition, further steps would be taken. This intention is very clear from MOU itself. 4.7.2. It is not in dispute that, for one reason or other, permissions were not granted by authorities and there was litigation. By date of filing of title suit No 222/2007 by transferee seeking specific performance, transferee claims to have paid sum of Rs. 13,91,90,000/- from time to time, and only sum of Rs.2,59,10,000/- was due and as such transferee demanded delivery of shares following by filing of such suit. It is only by way of settlement deed, pursuant to which compromise decree was passed, term relating to obtaining permissions was removed and parties, at their readiness and willingness could seek performance. Further on perusal of Annual Returns of Graphitech India Ltd 14 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla filed with Registrar of Companies for Annual General Meeting held on 30.9.2005, 30.9.2006, 30.9.2007, and 30.9.2008 produced by Assessee, learned CIT(A) found that shares in question continued in name of Assessee or their allied companies, whereas in Annual Returns for AGM held on 30.9.2009 those appear to have been transferred to name of purchaser and such transfer was duly recorded in books of Graphitech India Ltd., suggesting that till condition of obtaining permissions and clearances was either fulfilled or removed, parties did not consider it fit to proceed with matter. 4.7.3. question in these circumstances is that whether parties are in position to treat amount received prior to obtaining all permissions and clearances from departments of fire, Airport Authority, Pollution Control Board, Water and Sewerage etc. Because of stipulation as to annulment of understanding and refund of amounts received till such date within one month thereafter, it was not possible for Assessee to treat such amount as part for sale consideration, because both parties reasonably foresaw contingent of non obtainability of permissions and clearances, inasmuch as they have stipulated in MOU that in such event amounts received by Assessee are refundable within one month. Clause 13 of MOU suggests that even if entire consideration is paid and share certificates with Transfer deeds are delivered, title to shares will not pass to seller unless transferor obtains requisite permissions and clearances. In that sense controlling expression of "transfer" in present case is non conclusive as to agreement for sale or sale. Therefore, until permissions and clearances terms of MOU were obtained, it cannot be said that terms and conditions required for contract for sale under contract for sale are crystallised nor is there is any possibility of assessee treating amounts received in this regard as part for sale consideration. 4.7.4. Circular No. 704 dated 28.04.1995 with reference to section 2(42A) says that in cases of transactions taking place directly between parties and not through stock exchanges, date of contract for sale as declared by parties shall be treated as date of transfer, provided it is followed up by actual delivery of shares and transfer deeds. In this case according to assessee, date of contract for sale is date of compromise and compromise decree i.e 25.5.2009. For reasons set forth in preceding paragraphs, 15 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla we find that date of MOU cannot be taken as date of contract for sale because unless and until condition in Cl 13 is fulfilled understanding does not assume character of agreement for sale, and it is only on that event amount becomes part consideration. Till such time it is only advance amount only, not liable for tax under head of capital gains. 4.7.5. Next question that arises is as to what exactly sale consideration was, whether it was Rs.16,51,00,000/- as contemplated in MOU or Rs.14,01,00,000/- as adjusted in Cl 12 (a) read with Cl 11 of Terms of Settlement reached by parties and taken cognizance by Court vide Compromise Decree in TS No 222 of 2007. We have carefully gone through MOU dated 4.8.2005, subsequent court proceedings including Plaints, terms of settlement and compromise decree. In MOU it was mentioned as 16.51 Crs. So also mentioned in Plaint in TS 222 of 2007. In plaint of TS 222/2007 transferee vide paragraph 14 alleged that sale consideration was Rs. 16,51,00,000/-. In Para 9(a) they have stated that they paid from time to time sum of Rs. 13,91,90,000/- and vide Para 17 stated that only sum of Rs.2,59,10,000/- was due. This factual position was not disputed by parties in terms of settlement and vide Para 5, they agreed that let there be decree directing transferee to pay sum of Rs.2,59,10,000/- towards payment of balance purchase consideration of shares agreed to be transferred to transferee under MOU dated 4.8.2005. However, vide Para 11 of Terms settlement, parties agreed for decree against transferor for sum of Rs.2,50,00,000/- payable to transferee towards cost of litigation, compensation, etc. Vide Para 12(a) of said settlement, parties agreed to adjust amounts and transferee will give Rs.9,10,000/- by way of cheque. 4.7.6. Nowhere in papers could we find that parties intended to reduce sale consideration from Rs. 16.51 Cr. So also we did not find anywhere either from Terms of Settlement or Compromise petition or terms of decree of compromise. Whatever that was mentioned in MOU dated 4.8.2005 remained throughout as sale consideration for shares. Mere adjustment between parties for adjustment of mutual payments or set off smaller amount payable by transferor against larger amount payable by transferee does ipso facto cannot be said that amount after such adjustment alone is sale consideration. At best amount of Rs. 2.5 Cr paid by transferor to 16 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla transferee towards costs, compensation etc could be expenditure associated with sale of shares and accordingly could be construed as expenses on transfer while computing capital gains. 4.7.7. For foregoing discussion, we hold that when parties adopt mechanism in agreement for sale itself that if specified condition is not fulfilled, amounts paid shall be refunded and agreement shall be abandoned, and it is only on accomplishment of such condition any further steps would be taken, in such situation controlling expression of "transfer" is non conclusive as to true nature of transaction till condition is fulfilled and then date of fulfillment of such condition shall be taken as date of contract for sale within meaning of Circular No. 704 dated 28.04.1995 with reference to section 2(42A) and amounts paid by transferee till fulfillment of such condition would remain as advance only, but not as part for sale consideration for purpose of reckoning capital gains. Further, in absence of any express contract between parties, any liability of parties in form of costs etc due to some intervening circumstances, would not in any manner detract from chargeability of total sale consideration. At best those costs would be expenses relating to sale or purchase as case may be, which in any case, would be eligible for deduction while computing capital gains. 4.7.8. As regards handing over of share scripts to Solicitor Mr. B. K. Jain, it is seen that it was not accompanied with transfer deeds and indeed transfer deeds have been executed only in May 2009 when decree has been passed and effect of which has been observed in Annual Returns for 2009 wherein such transfer is duly reflected. careful reading of MOU along with compromise decree and even Circular No. 704 dt. 7.8.1995 it reveals fact that assessee has transferred shares of Graphitech India Ltd. in favour of Sri Vivek Kathotia only in Financial Year 2009-10 relevant to Asst Year 2010-11. We find in aforesaid factual matrix, it is clear that share scripts were transferred in Asst Year 2010-11 and hence accrual of gain, if any, has happened only in Asst Year 2010-11 as per Sec 45(1) of Act and such instrument of transfer having been executed in May 2009, transfer is effected only in May 2009. Hence, entire gain arising on sale of transfer (including cash component) of Rs. 6,00,90,000/- in Asst Year 17 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 2006-07 and Rs. 1,40,00,000/- in Asst Year 2007-08 has to be assessed in Asst Year 2010- 11 as part of sale consideration and as Capital Gain only. ld DR argued that assessee had voluntarily disclosed sum of Rs. 7,40,90,000/- as his income from other sources in return filed for Asst Year 2010-11. But during course of assessment proceedings, he requested to treat same as part of share sale consideration and be part of computation of income under capital gains. In this regard, we find that it is not in dispute that assessee had received cash component of subject mentioned transaction amounting to Rs. 7,40,90,000/- as per MOU dated 4.8.2005 in Asst Years 2006-07 and 2007-08, which was not disclosed by him in his regular books of accounts. On face of it, it might look undisclosed receipt. But in search proceedings, it surfaced that assessee was in receipt of cash component of Rs. 740.90 lacs only towards share sale consideration , said receipt cannot be taxed / treated separately under any other head other than capital gains . We hold that character of receipt does not change pursuant to search. Infact search proceedings had rather sanctified nature and character of such receipt to be part of share sale consideration. Accordingly, we hold that since it is part of transaction pertaining to sale of shares, cash component of Rs. 7,40,90,000/- cannot be treated separately and has to be treated as capital gain arising on sale of such shares and as such contention of revenue to treat same as otherwise cannot be upheld in any manner even in Asst Year 2010-11. In any case, said receipt cannot be taxed in Asst Years 2006-07 and 2007-08 separately. 4.7.9. As discussed earlier, transfer having taken place only in Financial Year 2009-10 relevant to Asst Year 2010-11, when executed transfer deeds along with share certificates were handed over Mr. Kathotia and when transfer pursuant to order of Court was completed, entire capital gain is taxable in Asst Year 2010-11 only and cash components in this regard received earlier cannot be taxed in Asst Years 2006-07 and 2007-08. 4.7.10. As result, we hold as follows : Asst year Appeal No. Ground Nos. Result 2006-07 34/K/12 1 to 5 Dismissed 2007-08 35/K/12 1 to 5 Dismissed 2010-11 857/K/14 1 to 4 Dismissed Hence, these grounds are disposed accordingly. 18 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 5. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SSG/1 A.Y 2008-09: IT(SS) 36/Kol/2012 1. Ground No. 2 - Ld. CIT(A) has erred in treating addition of undisclosed receipt of Rs. 3,03,65,126/- as per seized document SSG/1 as unexplained expenditure. 2. Ground No. 3 - Ld. CIT(A) has further erred in directing the A.O. to consider unaccounted receipt of Rs. 3,03,65,126/- as unexplained expenditure in cash flow statement. 3. Ground No. 4 - Ld. CIT(A) has erred in directing A.O. to consider receipt of Cut-off money of Rs. 74,27,109/- as per seized document SSG/1 as part of cash flow statement. C.O. 147/Kol/2012 Ground No.5 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming tbe action of AO in treating Rs.74,27,109/- & Rs.3,03,65,126/- as undisclosed receipts of tbe appellant on basis of alleged document SSG/1 and such action is without appreciating fact that such amounts as mentioned and as alleged to have been found from seized document were only estimate of expenses and actual expense were already recorded in books of account. Ld. ClT(A) failed to appreciate fact that there was no material to justify AO's action except mere assumption and without any cogent finding either during assessment proceedings or appellate proceedings and no material having been brought on record by Revenue to justify action in treating sum as undisclosed receipt, action of Ld. CIT(A) is wholly unjustified. Hence action of Ld, CIT(A) in confirming action of AO in such regard is liable to be quashed/ cancelled and set aside. This ground is without prejudice to fact that appellant has shown same as application of income offered by it and hence it may kindly be considered accordingly. Addl. Ground No.1 - For that in view of facts and circumstances Ld. CIT(A) erred in treating Rs. 3,03,65,126/- as unexplained expenditure and such action of Ld. CIT(A) is without appreciating facts that amount mentioned and alleged to have been found from appellant were only estimate of expenses and actual expenses having been already recorded in books of accounts, Ld. CIT(A) failed to appreciate facts that alleged amount cannot be unexplained expenditure and in view of facts and in circumstances in may kindly be held accordingly. Addl. Ground No.2 - For that in view of facts and in circumstances and without prejudice to legality of addition so made/ confirmed by Ld. CIT(A) 19 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla treating same as alleged unexplained expenditure. A.O. and Ld. CIT(A) erred in appreciating facts that amount of Rs. 28,12,000/- pertaining to seized document No. SSG/1 at page 9 has been added by AO twice and as such, such amount having been considered twice by AO, appellant's income has been increased by such amount wrongly and in view of facts and in circumstances it may kindly be held accordingly. Addl. Ground No.3 -For that in view of facts and in circumstances and without prejudice to Ground No. 1 above, treating Rs. 3,03,65,126/- as unexplained expenditure, AO and Ld. CIT(A) failed to appreciate facts that amount considered on basis of SSG/1 at pages 29-30 has been wrongly considered at Rs. 1,16,00,000/- without considering figures appearing in books of account and on consideration of such amount as appearing in books of account, addition in respect of such seized documents will reduce to 'Zero' and in view of facts and in circumstances it may kindly be held accordingly. additional ground raised in assessee s appeal in ITA No.1419/K/12 have not been repeated since assessee has submitted that such grounds are same as that in additional ground in Cross-objection and they have been raised only as precaution and are hereby admitted for adjudication. A.Y 2006-07: IT(SS) -34/Kol/2012 Ground No. 7 - Ld. CIT(A) is erred in directing A.O. to consider unexplained expenditure of Rs. 4,30,272/- added on basis of seized document SSG/1 against undisclosed cash receipt shown in cash flow statement and that of Ld. CIT(A) is against provision of section 69C of Income Tax Act. C.O No.145/Kol/2012 Ground No. 5 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs. 4,30,272/- as undisclosed expenditure of appellant on basis of alleged document SSG - 1 and such action of Ld.. CIT(A) in confirming action of AO is without appreciating facts and in view of facts and in circumstances addition so made is liable to be quashed / cancelled/ set aside. 5.1. brief facts of this issue is that ld AO has made addition of Rs. 74,27,109/- and Rs. 3,03,65,126/- in A.Y 2008-09 as undisclosed receipts and that of Rs. 4,30,272/- in A.Y 2006-07 as undisclosed expenditure on basis of seized document marked SSG/1. ld AO has noted in assessment order that material seized at SSG/1 contains detail of 20 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla expenses incurred on purchase of land by different companies of assessee group. These expenses mainly comprise value of land, stamp duty and registration cost, miscellaneous expenses and land development cost. ld AO examined seized material with reference to relevant books of account. It was found that except for land development cost, remaining expenses were recorded in regular books of account. However, land development cost as contained in seized material was only partly recorded in books of account. It was argued before ld AO that land development cost @ Rs. 5,000/- per cottah as mentioned in seized material was only estimate whereas actual expenses are recorded in books of account. ld AO did not accept explanation. He was of opinion that when all other expenses were correctly recorded in seized material, land development expenses as recorded therein cannot be treated as estimate. ld AO noted that seized material contained land development expenses of Rs. 5,07,50,375/- out of which sum of Rs. 2,03,85,249/- only was recorded in books of account. ld AO treated difference of Rs. 3,03,65,126/- as undisclosed receipt of assessee which was assessable as his undisclosed income in A.Y 2008-09. ld AO also found that seized material shows receipt of cut money of Rs. 46,34,960/- and Rs. 27,92,230/- which was assessable in case of assessee as his undisclosed income in Asst Year 2008-09. ld AO has mentioned in assessment order that assessee had already admitted cut money of Rs.45,54,460/- and has also included same in his statement of cash flow. ld AO further noted that page 54 of SSG/1 shows undisclosed expenditure of Rs. 1,25,000/- on account of legal expenses and that of Rs. 3,05,272/- on account of land development cost which was assessable as undisclosed expenditure in Asst Year 2006-07. 5.2. On perusal of ld AO s order it is observed as under :- Page 1 to 30 of seized documents marked SSG/1 reflect land development expenses of Rs. 5,07,50,375/- and cut money of Rs. 45,55,460/-. SSG/1 Page Name Amount (in No. Rs) 1 & 2 Saltee Citizone (Continuous Serials 1-66) 37,18,000/- 3 Saltee Buildcon (Land Development accounted for) 3,45,455/- 21 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 4 2,03,030/- 5 Puskar Niwas (Land development cost not shown other 10,89,578/- expenses shown as land development cost) 6 Saltee Valley 13,75,590/- 7 Syndicate Tanker 80,606/- 8 Mukti Shelter 1,90,818/- 9 Cozy Enclave (Started from page 10 and ends in page 9) 68,25,394/- 10 Anand Nirman (Started from page 11 (Sl . 1-21) ends page 10- 15,39,878/- 22-32) 12 Puskar Infrastructure 42,22,350/- 14 Utkarsh Horticulture 54,09,600/- 15 Darsh Enclave (P) Ltd. 9,30,000/- 16 Fast Flow 80,37,713/- 17 Debnath Consultant 18,69,151/- 18 Saltee Parks 16,00,000/- 22& Kerf Construction (P) Ltd. 35,69,939/- 23 23 & Saltee Village (Details starts from page 23 and end at 24) 16,54,485/- 24 25 Ankit Plantation 22,85,000/- 26 Dewan Export 26,59,970/- 29 & Marine Park (Statement started page 30 and B/F 26,70,967 and 31,43,788/- 30 end page 29) 5,07,50,375/- 5.2.1. cut money receipt as per page 12 of SSG/1 had already been admitted by assessee as undisclosed receipt. 5.2.2. Further there was also receipt of cut money of Rs. 27,92,230/- from M/s Puskar Niwas as per page 5 of SSG/1. Therefore, total cut money receipt by assessee was Rs. 74,27,109/- [Rs.46,34,960/- (page-12) + Rs,27,92,230/- (page 5) of SSG/1]. Page Name As per As per Difference No. seized books records 1 & Saltee Citizone (Continuous Serials 1- 3,718,000 845,672 2,872,328 2 66) 3 Saltee Buildcon (Land Development 345,455 302,987 42,468 accounted for) 4 203,030 - 203,030 5 Puskar Niwas (Land development cost 1,089,578 2,092,205 (1,002,627) not shown other expenses shown as land development cost) 6 Saltee Valley 1,375,590 280,197 1,095,393 22 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 7 Syndicate Tanker 80,606 130,328 (49,722) 8 Mukti Shelter 190,818 101,149 89,669 9 Cozy Enclave (Started from page 10 6,825,394 7,501,331 (672,937) and ends in page 9) 10 Anand Nirman (Started from page 11 1,539,878 456,202 1,083,676 (Sl . 1-21) ends page 10-22-32) 12 Puskar Infrastructure 4,222,350 2,990,048 1,232,302 14 Utkarsh Horticulture 5,409,600 613,258 4,796,342 15 Darsh Enclave (P) Ltd. 930,000 944,300 (14,300) 16 Fast Flow 8,037,713 - 8,037,713 17 Debnath Consultant 1,869,151 363,973 1,505,178 18 Saltee Parks 1,600,000 309,726 1,290,274 22& Kerf Construction (P) Ltd. 3,569,939 377,459 3,192,480 23 23 Saltee Village (Details starts from page 1,664,485 287,702 1,366,783 & 23 and end at 24) 24 25 Ankit Plantation 2,282,030 1,710,462 574,568 26 Dewan Export 2,659,970 1,078,250 1,581,720 29 Marine Park (Statement started page 30 3,143,788 - 3,143,788 & and B/F 26,70,967 and end page 29) 30 50,750,375 20,385,249 30,365,126 difference is treated as undisclosed income of assessee. Therefore, sum of Rs. 3,03,65,126/- on account of Land Development Cost receipt and Rs. 74,27,109/- on account of Cut Money receipt totaling to Rs. 3,77,92,236/- is added as assessee s undisclosed income for Asst Year 2008-09. It was further observed that Page 54 of SSG/1 shows some undisclosed expenditure of Rs. 1,25,000/- and Rs. 3,05,272/- on account of legal expenses and land development costs, which have been accepted as undisclosed. [Undisclosed income for Asst Year 2008-09 - Rs. 3,77,92,235/-] [Undisclosed expenditure for Asst Year 2006-07 - Rs. 4,30,272/-] 5.3. ld CITA in his order had observed following:- I have perused assessment order wherein AO has discussed material fact in detail. I have also perused remand report of AO wherein he has merely reiterated contentions as made in assessment order. Though copy of written submission along with enclosures was forwarded to him, AO has not offered any comments separately. I have considered relevant material as 23 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla available on record. I have also considered submission made on behalf of appellant and rejoinder to remand report. AO has mentioned in assessment order that appellant has admitted receipt of cut money of Rs. 45,54,460/- vide his letter dt. 11.11.2010 along with which computation of undisclosed income as per Annexure U, cash flow statement as per Annexure X, and explanation of seized documents marked SSG/1 as per Annexure B was also furnished. AO has also mentioned that appellant has explained at Annexure B that pages 1 to 39 of SSG/1 were statement of land purchased by group companies which was duly shown in their regular books of account. AO examined material before him and then concluded that expenses recorded in books of account are much less than those mentioned in seized documents. However AO found that land value, stamp duty and registration fees and miscellaneous expenses was duly recorded in books of account. AO rejected submission of appellant that land development cost as mentioned in seized document was merely estimate on ground that all other expenses were tallying with regular books of account of group companies. AO held that land development cost was not fully recorded in books of account. AO made comparative study on basis of seized document vis-a-vis regular books of account of group companies, and then, made addition of Rs. 3,03,65,126/- being difference in amounts as shown in seized documents and those as recorded in regular books of account of group companies. AO further held that cut money also was not recorded in books of account. AO noted that though appellant has admitted cut money of Rs. 45,54,460/- only, there was evidence of receipt of cut money of Rs. 46,34,960/- on page 12 and that of Rs. 27,92,230/- on page 5 of SSG/1. AO also observed that land development cost and cut money has actually been received by appellant as charges for services rendered by him. In view of above, AO made total addition of Rs. 3,77,92,235/- (Rs. 3,03,65,126/- plus Rs. 74,27,109/-) on account of undisclosed receipts in A.Y 2008-09. Ld. A.R has argued that seized documents were recovered from custody and possession of company Saltee Construction Co. Pvt. Ltd. and also AO has brought no material or evidence on record to show that such seized documents were in handwriting of appellant or his accountant. Under circumstances no addition could be made in case of appellant. Ld. A.R contended that land development cost as contained in seized documents merely represented estimates, and, that actual expenses incurred which was much lesser, was recorded in books of account. It was also argued that land development cost was incurred by group companies who were actual owners of land and such expenditure was also accounted for by them in their regular books of account. Consequently, excess expenditure, if any, on account of land development cost cannot be treated as undisclosed expenditure of appellant, and so, no addition can be made in his case. AO was conceptually wrong in holding that excess expenditure on land development cost as recorded in seized document was undisclosed receipt of appellant. By no stretch of imagination, excess expenditure of Rs. 3,03,65,126/- on account of land development expenses can be treated as undisclosed receipt of appellant. It was argued that difference of Rs. 3,03,65,126/- can at best be treated as undisclosed expenditure of group 24 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla companies. I find merit in this argument that difference of Rs. 3,03,65,126/- which represents excess expenditure on account of land development cost can only be treated as undisclosed expenditure. AO is conceptually incorrect in holding that such expenditure was undisclosed receipt of appellant. It was argued before me that such expenditure can be considered only in hands of respective companies, However, as appellant is in control of affairs of group companies and as appellant has also admitted receipt of cut money on behalf of companies, it is to be held that excess expenditure was made by him on behalf of such companies and consequently undisclosed expenditure was assessable in his hands. As regards receipt of cut money, appellant has mainly contended that addition has been made only on basis of confessional statement without bringing any corroborative material on record to show that such money was actually received by appellant. I do not find merit in this argument. admission made by appellant is certainly corroborated by documents seized in course of search. appellant has also included cut money of Rs. 45,54,460/- in his statement as cash flow. appellant is therefore not fair or justified in disputing receipt of cut money. Secondly, once appellant has himself admitted receipt of cut money of Rs. 45,54,460/-, he cannot argue that similar cut money of Rs. 27,92,230/- recorded in same seized documents SSG/1 does not belong to him. Hence entire cut money of Rs.74,27,109/- should be treated as cut money received by appellant; and, is assessable in his case as undisclosed income. Hence, this action of AO in treating cut money of Rs. 74,27,109/- should be treated as undisclosed receipt of appellant is confirmed. However once cut money of Rs. 27,92,230/- is assessed as undisclosed receipt, then consequential effect has to be given in as much as such receipt has to be considered as being available for use towards any unexplained expenditure made by appellant. I have considered submission made on behalf of appellant that land development cost, which is mentioned on average basis @ Rs 5000/- per cottah in seized document, cannot be same for all kinds of land and as such it should be considered as estimate only. However, appellant on his part has failed to adduce any separate evidence in this regard. In this factual background, I am of considered view that difference of Rs. 3,03,65,126/- has to be treated unexplained expenditure incurred by appellant on behalf of group companies, and consequently sum of Rs.3,03,65,126/- is confirmed as unexplained expenditure. Similarly, addition of Rs. 4,30,272/- in A.Y 2006-07 which was made on account of undisclosed expenses as contained on page 54 of seized document SSG/1 is also confirmed for same reason. However AO is directed to consider receipt of cut money of Rs. 74,27,109/- along with cash received from transaction with Fort Group as part of cash flow; and then consider net of unexplained expenditure of Rs. 3,03,65,126/- and Rs. 4,30,272/- if any, for purposes of addition. 5.4. ld AR advanced following arguments :- 25 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla (i) At outset ld AR contended that assessee had raised 3 Additional Grounds in C.O raised by it and 4 Additional Grounds in assessee s own appeal which also may kindly be considered. ld AR further submitted that additional ground in C.O & assessee s own appeal are similar and hence may be considered accordingly. (ii) assessee submitted that sum of Rs. 3,03,65,126/- (Page 54 of SSG/1) , Rs. 74,27,109/- (Page 12 & Page 5 of SSG/1) aggregating to Rs.3,77,92,935/- has been treated as undisclosed income of assessee by ld AO. ld AR stated that Rs. 74,27,109/- of alleged cut money in Asst Year 2008-09 and Rs. 4,30,272/- in Asst Year 2006-07 has been added only on basis of confessional statement and no other evidence was brought on record by ld AO. However, it was also submitted that assessee had considered same as undisclosed income in assessment proceedings as part of cash flow being cash available for unaccounted expenditure as well. (iii) As regards land development cost (LDC) of Rs.3,03,65,126/- it was stated that LDC has been incurred by various companies as mentioned in such document and hence it has to be considered in their hands only and which have not been examined at any stage. assessee contended that such LDC represented estimated expenditure towards development of land at Rs. 5,000/- per cottah approximately in most cases and for which attention was drawn to pages 337, 353, 370, 403 & 483 and similar other pages at paper book No. 4. assessee contended that at some places estimate is little higher as well such as pages 470, 505, 528 & 555 of Paper Book No.4. However, same is mere estimate of expenditure and cannot be treated as actual expenditure in any manner. (iv) ld AR also contended that such sum of Rs. 3,03,65,126/- merely represents expenditure and cannot be treated as income since assessee had done land filling for such company which is corroborated by expenses booked by respective companies to their books of account. (v) assessee then referred to Additional Ground No. 2 of C.O and Additional Ground No.2 of assessee s appeal being addition of Rs. 1,16,00,000/-. ld AR drew our attention 26 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla to fact that such transaction pertains to Marine Park Ltd. details of which are at page 611 of Paper Book (Volume 4). ld AR then submitted that land development expenses as per books has been considered at Nil by ld AO, whereas same is Rs. 1,16,56,247/-. As such there could not be any addition on such account. 5.4.1. ld AR then referred to Additional Ground No.3 of C.O and Additional Ground No.3 of assessee s appeal being addition of Rs. 28,12,000/-. ld AR drew our attention to fact that such transaction pertains to Cozy Enclave (P) Ltd. details of which are at page 441 of Paper Book (Volume 4). Page 9 of SSG/1 reflects that ld AO had added brought forward amount of land development expenses Rs. 28,12,303/- twice and hence same amounted to double addition. 5.4.2. As regards ld CITA s action in allowing set off of expenses so incurred by assessee and / or its associates, it was submitted by ld AR that there is no dispute in fact that assessee had received cash on account of transaction with Fort to tune of Rs. 7,40,90,000/- and also other receipts which was available with assessee and expenses were out of such sums only and hence ld CITA was fully justified in allowing such set off. ld AR also submitted that on perusal of assessment order itself, it could be observed that ld AO himself had allowed such set off and now revenue is disputing such action which amounts to disputing its own earlier action and which is not permissible as per law. 5.5. In response to this, ld DR contended that said amount of Rs. 3,03,65,126/- has to be treated as undisclosed income and relied heavily on order of ld AO. ld DR further submitted that document has been accepted by assessee in course of assessment proceedings itself and assessee had also accepted admission of cut money as undisclosed receipt. ld DR further contended that land development expenses cannot be construed as mere estimate of expenses in any manner and it is actual receipt of such sum by assessee and hence same has to be treated as undisclosed receipt only. 5.6. ld AR in his rejoinder re-iterated that such land development expenses were merely estimates of expenditure and expenditure incurred subsequently was much lesser 27 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla and in number of cases, expenses had been incurred till date of search and hence particularly like page 16 of SSG-1 and hence it cannot be construed as undisclosed income in any manner. 5.7. We have heard rival submissions and perused materials available on record including relevant pages of paper book and seized documents. issue involved aforesaid matter can be summarized vis- -vis seized document and relevant pages are as follows : SSG/1 Page 54 Rs. 4,30,272/- Page 12 Rs.46,34,960/- Page 5 Rs.27,92,330/- Rs.78,57,562/- (Undisclosed receipt) Pages 1 30 Rs.3,03,65,126/- (Undisclosed receipt /expenses) As regards sum of Rs. 27,92,330/- and Rs. 4,30,272/-, same has been accepted by assessee at assessment stage and as such we do not find much merit in matter and since nature of Rs. 46,34,960/- (comprised in Rs. 46,34,960/- + 27,92,330/- = Rs.74,27,290/-) is same i.e. cut money and since assessee has already accepted Rs.27,92,330/, Rs.46,34,960/- is also treated as undisclosed receipt only and hence same treated accordingly as undisclosed receipt only. 5.7.1. As regards sum of Rs. 3,03,65,126/- pertaining to pages 1 30 of SSG-1, we find assessee s contention is that same is estimate of expenses. On perusal of document , we find that there is much variation of such sums as reflected in seized documents and such sum is not merely Rs. 5,000/- per Cottah. assessee s contention in such seized documents pages 1-30 of SSG/1 cannot be accepted. However, ld AR has successfully pointed out that in some documents such amount has been mentioned whereas nothing has mentioned in books of account and hence it has to be necessarily followed that such sums are expenses incurred by assessee and actual expenses have been booked in respective companies. Moreover, we find that ld AO has chosen to treat said sums as undisclosed income merely on assumption without any evidence being in his possession nor he examined such companies. Hence assumption has to be followed 28 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla that since some of such companies are assessee s associate concern as observed by ld CITA and which has also not been disputed by revenue in its appeal at any stage. Hence necessary corollary of these facts is that these sums referred to as Land Development Cost is nothing but expenditure incurred and hence has to be treated as Undisclosed expenditure only. In respect of treatment of said sum as undisclosed expenses, we find substantial merit in fact and we uphold order of ld CITA. 5.7.2. As regards revenue s ground in treating Rs. 78,57,562/- (Rs.4,30,272/- + Rs. 46,34,960/- + Rs.27,92,330/-) as available for set off in cash flow and also allowing set off of Rs. 3,03,65,126/- out of available cash , we find merit in fact that that ld AO himself had allowed such set off in assessment order so revenue cannot be allowed to change its stand now. Even otherwise, revenue is not in possession of any evidence nor it has furnished any such fact on record that sums expended were other than out of sum earned / received as cash by assessee. Hence, we concur with order of ld CITA in allowing sums as part of cash flow and as such revenue s ground fails on such account. 5.7.3. As regards assessee s contention in Additional Grounds No. 1, 2 & 3 in C.O 147/K/12 for A.Y 2008-09 and Additional Grounds No.1, 2, 3 & 4 in assessee s appeal in ITA No.1419/K/12 we have gone through material placed and we find merit in matter. However, such issue pertaining to pages 29-30 (SSG/1) related to addition of Rs.1,16,00,000/- and page 9 (SSG/1) related to addition of Rs. 28,12,000/- is being set aside to ld AO for verification in interest of justice and fairplay and direct ld AO to decide these claims of assessee. Pursuant to verification by ld AO, if claims of assessee are found to be true, then relief sought by assessee in that regard is to be granted. We direct ld AO accordingly. 5.7.4. As result, we summarize as follows : Asst year Appeal No. Ground Result Nos. 2006-07 34/K/12 7 Dismissed 145/K/12 5 Dismissed 2008-09 36/K/12 2 Dismissed 3 Dismissed 4 Dismissed 29 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 147/K/12 5 Dismissed Addl. 1 Allowed Ground for statistical purposes Addl. 2 Allowed Ground for statistical purposes Addl. 3 Allowed Ground for statistical purposes 6. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SSG/3 A.Y 2007-08: C.O. 146/Kol/2012 Ground No. 5 -For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs. 18,00,000/- as undisclosed expenditure of appellant on basis of alleged document SSG - 3 and in view of facts and in circumstances action of Ld. CIT(A) in such regard is without appreciating facts and in circumstances it may be kindly be held accordingly. A.Y 2008-09 C.O. 147/Kol/2012 Ground No.6 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs. 37,25,000/- as undisclosed expenditure of appellant on basis of alleged document SSG-3 and in view of facts and in circumstances action of Ld. CIT(A) in such regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly. A.Y 2009-10 C.O. 148/Kol/2012 Ground No.8 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs.10.00,000/- & Rs.84,66.224/- as undisclosed expenditure of appellant on basis of alleged document SSG-3 and in view of facts and in circumstances action of Ld. CIT (A) in such regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly. 30 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla A.Y 2007-08 IT(SS) 35/Kol/2012 Ground No. 7 - Ld. CIT(A) is erred in directing A.O. to consider unexplained expenditure of Rs.18,00,000/- added on basis of seized document SSG/3 against undisclosed cash receipt shown in cash flow statement and that of Ld. CIT(A) is against provision of section 69C of IT Act. A.Y 2008-09 IT(SS) 36/Kol/2012 Ground No. 5 - Ld. CIT(A) has erred in directing A.O. to consider unexplained expenditure of Rs. 37,25,000/- as per seized document SSG/3 against unaccounted cash receipt of assessee. A.Y 2009-10 IT(SS) 37/Kol/2012 Ground No. 3 - Ld. CIT(A) has further erred in directing A.O. to consider unexplained expenditure of Rs. 84,66,724/- as per seized document SSG/3 against accounted cash receipt of Rs. 7,40,90,000/- in A.Y. 2006-07 & 2007-08. 6.1. brief facts of this issue are that ld AO found that seized documents SSG/3 contain original money receipts by cash as well as by cheque. ld AO has noted in assessment order that assessee admitted such undisclosed expenses of Rs. 18,00,000/-, Rs. 37,25,000/- & Rs.16,20,000/- in Asst Years 2007-08, 2008-09 & 2009-10 during assessment proceedings and has also included them in cash flow statement. ld AO thus made addition of Rs. 18,00,000/-, Rs. 37,25,000/- & Rs.16,20,000/- in Asst Years 2007-08, 2008-09 & 2009-10 on account of undisclosed expenditure. ld AO found that page 26 of seized document SSG/3 contains undisclosed expenditure of Rs.17,63,664/- & Rs.36,53,564/- incurred in respect of projects at EN-62 and DN-18. ld AO further found that page 27 contains detail of payments by cash as well as by cheque cash component being Rs. 6,51,288/-. Similarly, page 29 to 32 contain net loss of Rs. 7,77,878/- on book fair organized by assessee. ld AO concluded that undisclosed expenses of Rs. 7,77,878/- was embedded in such loss. ld AO found, on other hand, that page 3 of seized document SSG/3 is account statement of Mackintosh Burn Limited reflecting unaccounted receipt of Rs. 10,00,000/- which was admitted by assessee, and was also included in cash flow statement. ld AO thus made addition of Rs. 10,00,000/- in Asst Year 2009-10 as undisclosed receipt and additions of Rs. 18,00,000/-, Rs. 37,25,000/- 31 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla and Rs. 84,66,724/- (Rs. 16,20,000/- plus Rs. 17,63,994/- plus Rs. 36,53,564/- plus Rs. 6,51,288/- plus Rs.7,77,878/-) in Asst Years 2007-08, 2008-09 and 2009-10 as undisclosed expenditure on basis of seized documents marked SSG/3. order of ld AO is reproduced as under :- This seized document consists of loose bunch of documents containing original money receipts in cash and cheque. During assessment proceedings, assessee has admitted Rs. 71,45,000/- as undisclosed expenditure vide Annexures D and D-1 read with date wise undisclosed cash flow statement as per Annexure X and statement of undisclosed expenditure as per Annexure U, which are integral part of assessee s letter dt. 11.11.2010. year-wise undisclosed expenditure comes as follows : A.Y 2007-08 Rs. 18,00,000/- A.Y 2008-09 Rs. 37,25,000/- A.Y 2009-10 Rs. 16,20,000/- assessee further disclosed sum of Rs. 10,00,000/- as received out of books for F.Y 2008-09 relevant to A.Y 2009-10 as per page 3 of above seized item which is account statement of Mackintosh Burn Limited. Page 23 of SSG/ 3 contains details of site wise figure of investments upto 15.2.2009 at different site/ projects of assessee. 6.2. ld CITA in his order observed as follows : - I have perused assessment order and remand report of AO. I have also considered submission of appellant and material on record. I find that undisclosed receipt of Rs. 10,00,000/- as contained in page 3 of seized document SSG/3 as well as undisclosed expenses of Rs. 18,00,000/-, Rs.37,25,000/- and Rs. 16,20,000/- has been included by appellant in his statement as cash flow filed in course of assessment proceedings. There can be no dispute regarding assessability of undisclosed receipt of Rs. 10,00,000/- which has also been included by appellant in his statement of cash flow. addition of Rs. 10,00,000/- in A.Y 2009-10 on account of undisclosed receipt is confirmed. undisclosed expenses of Rs. 18,00,000/-, Rs.37,25,000/- and Rs. 16,20,000/- are admitted by appellant and also included in his statement of cash flow. As regards other expenses of Rs. 17,63,994/-, Rs. 36,53,564/-, Rs.6,51,288/- and Rs. 7,77,878/- appellant has brought no material on record to rebut findings of AO that these are undisclosed expenses of appellant. I therefore uphold order of AO that all these expenses are to be treated as unexplained expenses of appellant. However, I find merit in argument that such undisclosed expenses are to be considered as being made out of undisclosed receipts as shown by appellant and also accepted by AO. cash flow statement had been filed before AO in respect of unaccounted income which mainly comprised of cash received on different dates from Fort Group in connection with sale of shares. cash flow statement was forwarded to me by AO along with his remand report. I find from its perusal that appellant had sufficient cash balance available with him for expenses or investment. And, as AO has brought no material on record to show 32 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla that such cash balance was otherwise invested or spent by appellant, it has to be accepted that such cash balance was available with appellant to cover for unexplained expenses. Accordingly, AO is directed to consider net of unexplained expenses of Rs. 18,00,000/-, Rs.37,25,000/-, Rs. 16,20,000/- , Rs. 17,63,994/-, Rs. 36,53,564/-, Rs.6,51,288/- and Rs. 7,77,878/- , if any, for purposes of addition. 6.3. ld AR argued following:- (i) He contended that money receipts are not in name of assessee, and so, no addition can be made in his case. It was also argued that seized material was not found from possession or custody of assessee. (ii) ld AO had made addition on basis of confessional statement of assessee without bringing any cogent material on record. (iii) From perusal of assessment order and page 18 of assessment order, it will be seen that ld AO had proposed additions of Rs. 18,00,000/ -, Rs. 37,25,000/ -, Rs. 10,00,000/- & Rs. 84,66,724/- in Asst Years 2007-08, 2008-09, 2009-10 & 2009-10 respectively on basis of seized documents at SSG-3. (iv) As will appear from assessment order, ld AO has made such additions on account of different money receipts issued by different persons in respect of payments made by them to different persons. ld AO has treated such payments as unaccounted payments of assessee. (v) As will appear from seized documents, none of such money receipts stand in name of assessee herein and as will further appear from seized documents such money receipts have been issued by different persons including some Corporate Bodies and hence assessee fails to understand as to under which provisions of Act same could be treated as unexplained expenditure in respect of unaccounted payments made by assessee. (vi) In this connection, it may not be out of place to mention that none of such persons who had issued such money receipts or received amounts had ever been examined by ld AO nor ld AO had ever allowed any opportunity to assessee to cross-examine such 33 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla persons nor ld AO had ever examined of any books of account of such person. (vii) None of such seized papers were seized from custody and or possession of assessee and all such seized documents were seized only from possession of Saltee Construction Co. Pvt. Ltd. as will be apparent from Panchanama B and hence entire action of ld AO in making such additions during different assessment years as under is wholly bad, illegal, unjustified and uncalled for and in view of facts and circumstances accordingly prayed for deletion of same. 6.4. In response to this, ld DR argued that such documents having SSG/3 were found in premises owned / controlled by assessee and / or its associated concern and hence it is necessarily to be presumed that such document pertains to assessee only. ld DR vehemently argued that said sum be treated as undisclosed expenditure only as per finding given by ld AO in its order. 6.5. We have heard rival submissions and perused materials available on record including paper books submitted in that regard. We have gone through material placed i.e. SSG/3 particular pages as follows : Pgs 3 & 8 Rs. 18,00,000/- A.Y 2007-08 Expenses Various pages Rs.37,25,000/- A.Y 2008-09 Expenses Pgs 32,33, 26 & 27 Rs.84,66,724/- A.Y 2009-10 Expenses Pg 33 Rs. 10,00,000/- A.Y 2009-10 Income assessee has merely re-iterated that documents doesn t belong to it. However, he failed to rebut contention that contents of such document does not relate to him and indeed we find that ld AO had rightly added such sum as undisclosed receipt in respect of page 33 and undisclosed expenses in respect of pages 3,8,33 and other pages as mentioned . Hence, we find merit in action of revenue and assessee s grounds in that regard fails and are confirmed as undisclosed expenses / income accordingly. As regards revenue s ground in treating Rs. 18,00,000/-, Rs.37,25,000/- & Rs.84,66,724/- out of available cash, we find merit in fact that ld AO himself has allowed such set off in assessment order, so revenue cannot be allowed to change its 34 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla stand now. Even otherwise, revenue is not in possession of any evidence nor it has furnished any such fact on record that sums expended were other than out of sum earned / received as cash by assessee. Hence, we concur with order of ld CITA in allowing sums as part of cash flow and as such revenue s ground fails on such account. As result, we hold as follows : Asst year Appeal No. Ground Result Nos. 2007-08 146/K/12 5 Dismissed 35/K/12 7 Dismissed 2008-09 147/K/12 6 Dismissed 36/K/12 5 Dismissed 2009-10 148/K/12 8 Dismissed 37/K/12 3 Dismissed Hence these grounds are disposed accordingly. 7. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SSG / 6 A.Y 2009-10 C.O. 148/Kol/2012 Ground No.9 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs. 6,00,000/- on basis of alleged seized document SSG-6 and in view of facts and in circumstances action of Ld. CIT (A) in such regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly. This ground is without prejudice to fact that appellant has shown same as application of income offered by it and hence it may kindly be considered accordingly. A.Y 2009-10 IT(SS) 37/Kol/2012 Ground No. 4 - Ld. CIT(A) has erred in directing A.O. to consider unexplained expenditure of Rs. 6,00,000/- as per seized document SSG/6 against accounted cash receipt in A.Y. 2006-07 & 2007-08. 7.1. brief facts of this issue are that ld AO found that page 13 of seized documents SSG/6 contains detail of expenses totaling to Rs. 6,00,000/- on purchase of tickets and TV, and also cash payments of Rs. 3,55,080/-. It was contended before ld AO that seized document was not related to assessee as it was not found from his 35 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla possession. ld AO did not accept explanation and made addition of Rs. 6,00,000/- as undisclosed expenses in A.Y 2009-10. ld AR merely mentioned that such expenses be treated as part of cash flow out of available cash with assessee. 7.2. ld CITA in his order has observed and decided as follows : - AO found that page 13 of seized documents SSG/6 contains detail of expenses totaling to Rs. 6,00,000/- on purchase of tickets and TV, and also cash payments of Rs. 3,55,080/-. It was contended before AO that seized documents was not related to appellant as it was not found from his possession. AO did not accept explanation and made addition of Rs. 6,00,000/- as undisclosed expenses in A.Y 2009-10. Ld. A.R reiterated submission made at assessment stage. I do not find merit in submission. order of AO in considering expenses of Rs. 6,00,000/- is confirmed. However, AO is directed to consider same as part of cash flow and then, consider net of unexplained expense of Rs. 6,00,000/- if any for purposes of addition. 7.3. We have heard rival submissions and perused materials available on record including paper book filed in that regard. We find no merit in assessee s appeal. However, as regards revenue s appeal, we hold that as regards ld CITA s action in allowing set off of expenses so incurred by assessee and / or its associates, it was submitted by ld AR that there is no dispute in fact that assessee had received cash on account of transaction with Fort to tune of Rs. 7,40,90,000/- and also other receipts which was available with assessee and expenses were out of such sums only and hence ld CITA was fully justified in allowing such set off. As regards revenue s ground in treating Rs. 6,00,000/- as available for set off in cash flow and also allowing set off of Rs. 3,55,080/- out of available cash, we find merit in fact that that ld AO himself has allowed such set off in assessment order so revenue cannot be allowed to change its stand now. Even otherwise, revenue is not in possession of any evidence nor it has furnished any such fact on record that sums expended were other than out of sum earned / received as cash by assessee. Hence, we concur with order of ld CITA in allowing sums as part of cash flow and as such revenue s ground fails on such account. As result, we hold as follows : 36 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla Asst year Appeal No. Ground Result Nos. 2009-10 148/K/12 9 Dismissed 37/K/12 4 Dismissed Hence these grounds are disposed accordingly. 8. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SSG / 8 READ WITH SSG / 44 A.Y 2006-07 C.O. 145/Kol/2012 Ground No. 6 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs.10,00,000/- as undisclosed expenditure on basis of alleged seized document SSG-8 and such action of Ld. CIT(A) in confirming action of AO is without appreciating facts and in view of facts and in circumstances addition so made is liable to be quashed I cancelled/ set aside. A.Y 2008-09 C.O. 147/Kol/2012 Ground No. 7 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs.50,000/- as undisclosed expenditure on basis of alleged seized document SSG-8 and in view of facts and in circumstances action of Ld. CIT (A) in such regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly. A.Y 2009-10 C.O. 148/Kol/2012 Ground No.10 - For that in view of facts and circumstances Ld. CIT (A) erred in confirming action of AO in treating Rs.1,67,000/- as undisclosed expenditure on basis of alleged seized document SSG-8 and in view of facts and in circumstances action of Ld. CIT (A) in such regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly. This ground is without prejudice to fact that appellant has shown same as application of income offered by it and hence it may kindly be considered accordingly. Additional Ground - For that in view of facts and circumstances and without prejudice to legality of addition of Rs. 26,64,00,000/- made on basis of SSG-8 alleged to have been found from appellant and without prejudice Ld. CIT(A) erred in treating said Companies as Group Companies of appellant without 37 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla bringing an evidence on record as to shareholding of such company vested with appellant and consequently observation by Ld. CIT(A) in such respect may kindly be deleted accordingly. A.Y 2006-07 IT(SS) 34/Kol/2012 Ground No. 8 - Ld. CIT(A) is erred in directing A.O. to consider unexplained expenditure of Rs. 10,00,000/- made on basis of seized document SSG/8 against cash receipt shown in cash flow statement during hearing and that order of Ld. CIT(A) is in contravention of Section 69C of IT Act. A.Y 2008-09 IT(SS) 36/Kol/2012 Ground No.6 - Ld. CIT(A) erred in directing A.O. to consider unexplained expenditure of Rs. 50,000/- as per seized document SSG/8 against unaccounted cash receipt of assessee. A.Y 2009-10 IT(SS) 36/Kol/2012 Ground No.5 - Ld. CIT(A) has erred in deleting addition of Rs. 27,03,31,000/- as undisclosed investment for purchase of Land of 2950.56 cottoh in Phase-1, Phase-2, Mohammadpur, Jamalpura. Ld. CIT(A) has erred in not appreciating pages 31,32,37 of seized document-SSG/44 (correct SSG/8) Ground No.6 - Ld. CIT(A) has erred in directing A.O. to consider unexplained expenditure of Rs. 1,67,000/- (as per seized document SS/8) against accounted cash receipt of assessee. 8.1. brief facts of this issue are that ld AO found that seized documents SSG/8 contain money receipts of Rs.10,00,000/-, Rs.50,000/- and Rs.1,67,000/- which was admitted by assessee as his undisclosed expenses in Asst Years 2006-07, 2008-09 and 2009-10; and, has also been declared in his statement of cash flow. ld AO thus made additions of Rs.10,00,000/-, Rs.50,000 and Rs.1,67,000/- as undisclosed expenses in Asst Years 2006-07, 2008 09 and 2009- 10. ld AO has also referred to page 31 of SSG/8 which contains details under head "ACCOUNT AS ON 15TH DECEMBER, 2008". ld AO felt that figures on page 31 are apparently written in lakhs. figure of 3609.987 was mentioned against land area of 2950.56 cottah - ld AO presumed that figure 3609.987 actually meant Rs.36,09,98,700/- which was used for purchasing 2950.56 cottah of land. It was explained at assessment stage that figure of 3609.987 actually 38 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla represented Rs.36,09,987/- which was meant for land filling charges. same was admitted as undisclosed expenses, and, was also included in statement of cash flow. ld AO noted that explanation was not satisfactory. ld AO referred to seized documents SSG/44 to conclude that cost of land was Rs. l Iakh per cottah. ld AO then concluded that total investment of Rs.37,64,00.000/- was made towards purchase of land. As sum of Rs.1l,00,00,000/- was recorded towards investment in land in books of account of group companies, ld AO concluded that assessee had made undisclosed investment or Rs.26,64,00,000/- towards purchase of land. ld AO also considered undisclosed expenditure on account of land-filling charges at Rs.37,64,000/-. ld AO thus made total addition of Rs.27,03,31,000/- (Rs.26,64,00,000/- plus Rs.37,64,000/- plus Rs.1,67,000/-) in Asst Year 2009-10. assessment order of ld AO is reproduced as under - Pages - 19, 21, 22 to 24 contains money receipt of Rs.50,000/-, Rs. 67,000/-, Rs.10,00,000/- , Rs. 20,11,000/- & Rs.1,00,000/- respectively, out of which assessee admitted following amounts as his undisclosed expenditure. Payments F.Y A.Y Amount (Rs.) 2005-06 2006-07 10,00,000/- 2007-08 2008-09 50,000/- 2008-09 2009-10 1,67,000/- It appears that page - 31 of SSG/8 contains details of land purchased upto 15.12.2008 under head written as Account as on 15th December, 2008". figures on this page is apparently written in lakh of Rupees. As per this page, total land of 2950.56 Cottah was purchased for Rs. 36,09,98,700/- in phase -1, phase-2, Mohammad Pur, Jamalpara. [Also refer pages -31, 32, 37 of SSG-44]. From lower part of table appearing in page - 31 of SSG-8, it appears that total amount of Rs. 37.64 crores had been received by assessee out of which Rs. 70 lakhs had been claimed to have paid and Rs. 36.09 crores had been spent on land a/c. leaving balance of Rs.85 lakhs. assessee admitted undisclosed expenditure to tune of Rs.36,09,987/- vide letter dt. 11.11.2008. assessee was asked to substantiate same. assessee submitted vide letter dated 14.12.2010:- "In last hearing, your goodself had asked us to substantiate land filing charges vis-a-vis regular books of accounts. In this connection, it is submitted that this page is account given by contractor for. .land filing expenses purported to have been .incurred by him as on 15.12.2008. figure of Rs. 3609.987 represent 36,09,987/-. This is amount purported to have been 39 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla incurred by him. Our clients had advanced Rs. 37,64,000/- as mentioned in seized document itself which was more than contractor's own bill. As such, Rs.70,000/- was returned by him as per his statement in seized document mentioned above. " In his clarification vide para-15 of letter dt. 14.12.2010, assessee denied that figures at page - 31 of SSG/8 is Rs. 36,09,98,700/- and claimed that it is actually Rs. 36,94,000/- and claimed that it is actually Rs. 36,94,000/-. assessee's explanation is not acceptable and not supported with clinching evidence. It is found from page 32 and 33 of SSG/44 that assessee had purchased 66.34 cottah of land for Rs. 65,71,304 almost @ Rs. 1 lakh per cottah in Mohammedpur as on 15.3.2005. As per statement as on 15.12.2008 in page 31 of SSG/8 it is found that 77.38 cottah of land purchased at Mohammedpur. If rate of Rs. 1 lakh per cottah is applied then investment for land purchase in Mohammedpur comes to nearly Rs. 77 lakhs which is almost matching with rate 1.0405 for 77.38 cottah totaling to Rs. 80,51,100/- (written as 80.511 in: page 31 of (seized document SSG/8). Therefore, figure of 36.64 is actually Rs. 36.64 crores taking into note of abbreviated figures of page 31 of SSG/8. figure 1.2 in column of rate actually denotes 1.20 lakhs for purchase of 2707.76 cottah for total value of Rs.32,49,31,400/- From discussions in earlier paras and assessee s admission vide letter dt. 11.11.2010 that assessee is in habit of writing figures with zero suppressions. Therefore, Rs. 37,64,00,000/- is being considered as investment by assessee in purchasing 2950.56 cottah of land in phase -1, phase 2, Mohammedpur, Jamalpur. Since above document has been found from custody of assesse during he search proceedings and on basis of presumptive theory entire undisclosed investment of Rs. 26,64,00,000/- ( out of this investment, Rs. 11 crores has been recorded as investment in books of different companies, incidentally it is to be mentioned that bank account details of these company were also found from custody of assessee ) is treated as assessee s undisclosed investment. [Undisclosed expenditure for A.Y 2006-07 Rs. 10,00,000/-] [Undisclosed expenditure for A.Y 2009-10 Rs. 50,000/-] [Undisclosed expenditure for A.Y 2007-08 Rs. 27,03,31,000/-] 8.2. ld CITA observed as follows:- I have perused assessment order and remand report of AO. I have also considered submissions of appellant and material on record. AO has mentioned in assessment order that seized documents SSG/8 contain money receipts of Rs.10,00,000/-, Rs.50,000 and Rs.1,67,000/- which was admitted by appellant as his undisclosed expenses in A.Ys 2006-07, 2008-09 and 2009-10; and has also been included in his statement of cash flow. AO has thus made additions of Rs.10,00,000/-, Rs.50,000 and Rs.1,67,000/- as undisclosed expenses in A.Ys 2006-07, 2008-09 and 2009-10. I uphold order of AO that these expenses are 40 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla to be treated as part of cash flow statement and AO is directed to consider net of expenses, if any, for purposes of addition. AO has referred to page - 31 of SSG/8 which contains details under head Account as on 15th December, 2008 . I find merit in argument that while interpreting seized document, AO has made too many presumptions and assumptions without any basis. For, AO has simply presumed that seized document contains details regarding purchase of land. seized document has mentioned Account as on 15th December, 2008 . It was nowhere mentioned that account relates to purchase of land. But, then, AO has presumed without any basis that it pertains to purchase of land. It is only on basis of his own imagination that AO has concluded that document is related to purchase of land. But then AO has presumed without any basis that it pertains to purchase of land. It is only on basis of his own imagination that AO has concluded that document is related to purchase of land. It appears from assessment order that group companies have shown investment of Rs. 11 crores in land in their books of account. As AO has allowed set off for investment of Rs. 11 orores while computing undisclosed investment, AO seems to have presumed that land was purchased by group companies for which unaccounted payment was made by appellant. But then, detail of sellers was available with AO. AO could have called for land deed from group companies and examined sellers which he has failed to do. Even in course of remand proceedings, AO has failed to bring any positive material or evidence on record in support of his action. It was also argued that entire investment in land was not made in F.Y 2008-09. On contrary, land was also purchased in preceding years. And so, Account as on 15th December, 2008 cannot be related to purchase of land. Secondly, AO has made another presumption without any basis that figures are mentioned in lakhs. It was contended before me that AO has wrongly mentioned in assessment order that appellant admitted vide submission dt. 11.11.2010 about his habit of suppressing zeros while writing figures. I find substance in argument that use of words like appears or apparently only suggests that AO is himself not sure of facts and that he was relying more on presumptions and guess work that on material facts. I find from assessment order that appellant had explained before AO that seized document was related to land filling charges in respect of land that was already owned by group companies for which investment of Rs. 11 crores was also shown in regular books of account. seized document actually contained account given by contractor for land filling expenses incurred by him as on 15.12.2008. figure of 3609.987 actually represented Rs. 36,09,987/- amount that was incurred by contractor towards land filling charges. As advance of Rs. 37,64,000/- was already given to contractor, he had returned Rs. 70,000/- and balance of Rs. 84,013/- was pending. As land filing expenses of Rs. 36,09,987/- was not recorded in regular books of account of group companies, same was admitted as undisclosed income and was also included in statement of cash flow. But, explanation as made by appellant was rejected by AO more on presumptions than on factual ground. decision of AO is not based on proper findings. While interpreting seized document at page 31 of SSG/ 8, AO has made too many presumptions which are totally arbitrary and 41 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla without any basis. observations of AO are not based on any material fact or documentary evidence. As assessment has to be made by AO on basis of material and evidence available on record. But, in present, case order of AO is based more on presumptions than on factual ground. AO has only created hypothetical situation by his own imagination and then draws such conclusions which have no legs to stand test of law. In view of above, I am of considered opinion that conclusion drawn by AO that seized document SSG/8 represents undisclosed investment of Rs. 26.64 crores made by appellant on behalf of group companies is arbitrary and without any basis and that it was not supported by any material or evidence on record. action of AO cannot be upheld. addition of Rs. 26,64,00,000/- is directed to be deleted. appellant has submitted that seized document at page 31 of SSG/ 8 contains land filing expenses of Rs. 36,09,987/- in respect of land owned by group companies. It was also admitted before AO that these expenses were not recorded in regular books of account of group companies and so same was included in statement of cash flow. I therefore uphold order of AO that land filling expenses of Rs. 36,09,987/- had to be considered in case of appellant as undisclosed expenses. However, as these expenses are already included in statement of cash flow, AO is directed to consider net of expenses, if any, for purposes of addition. 8.3. ld AR argued following:- (i) He contested that money receipts of Rs.10,00,000/-, Rs.50,000/- & Rs. 1,67,000/- has been declared in statement of cash flow and so, these unexplained expenses are covered by undisclosed income already declared to department. ld AO was therefore not justified in making separate additions on account of such undisclosed expenses. (ii) ld AR re-iterated that seized document was not seized from possession or custody of appellant. Neither it contains name of assessee or any associate firm / concern and indeed it didn t contain any name. (iii) Secondly, there was no material on record to suggest that assessee has made purchase of land. land belongs to group companies and investment of Rs. 11 Crores is shown in their books of account. (iv) ld AR explained that page 31 of SSG/8 contains details under head ACCOUNT AS ON 15TH DECEMBER, 2008 . It was argued that ld AO has made too many presumptions and assumptions about seized document. ld AO has presumed 42 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla that seized document contains details regarding purchase of land which is nowhere mentioned on seized document. seized document has simply mentioned ACCOUNT AS ON 15TH DECEMBER, 2008 . It has nowhere mentioned that account relates to purchase of land. (v) ld AR contended that observation made by ld AO was factually incorrect. use of words like appears or apparently clearly suggests that ld AO was himself not sure about facts. It was explained before ld AO that seized document was related to land filling charges for existing land that was owned by group companies for which investment of Rs. 11 crores was also shown in their regular books of account. seized document actually contained account given by contractor for land filling expenses purported to have been incurred by him as on 15.12.2008. figure of 3609.987 actually represented Rs. 36,09,987/-, amount that was incurred by contractor towards land filling charges. As advance of Rs. 37,64,000/- was already given to contractor, he had returned Rs. 70,000/- and balance of Rs. 84,013/- was pending. As land filling expenses of Rs. 36,09,987/- was not recorded in regular books of account of group companies same was admitted as undisclosed expenses and was also included in statement of cash flow. conclusion of ld AO that assessee has made undisclosed investment of Rs. 26.64 crores towards purchase of land is factually incorrect, and is not supported by any material or evidence on record. conclusion is based purely on presumptions and assumptions. ld AO has also added land filling charges which amount to divergent stand of ld AO and also amounts to double addition for same document. (vi) No part of land area mentioned in page 31 of SSG-8 were ever purchased by assessee nor any such land or part of any such land belonged to assessee nor ld AO has brought any cogent evidence on record to prove that such land was ever purchased by your assessee and in this connection this is to affirm and declare such land or part of any such land was never purchased by your assessee. To best knowledge of assessee even neither Saltee Construction Co. Pvt. Ltd. or any group Company of assessee had ever purchased any such land or part of such land. (vii) ld AR then took us to letter dt. 11.12.2010 filed before ld AO and which is 43 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla part of Annexure I filed before us during course of hearing. On page 2186 which was letter dt. 11.12.2010 it was explained before ld AO that it is mere land filling charges. (viii) ld AR then took us to page 728 of paper book (Paper Book No.5) and also to pages 31, 32 and 33 of SSG/44 and submitted that average rate of land is Rs. 44,281/ Cottah only. ld AR then submitted that ld AO has merely presumed rate Rs 1,00,000 per Cottah on particular area only and then superimposed this rate of 1,00,000 per Cottah on entire area of 2950.56 Cottah (as on 15.3.2008) to justify his case of treating figure 3609.987 as Rs.36,09,98,700/-. Hence ld AO has merely picked up and chosen amount of his choice without considering document as whole. (ix) ld AR also drew our attention to fact that as per seized documents at page 32 SSG/44 for total land area of 2486.20 Cottah value is Rs.11,00,93,463/- (as on 15.3.2008) whereas as per page 31 SSG/8 land area is 2950.56 Cottah land value has been considered by ld AO at Rs. 36,09,98,700/- (as on 15.12.2008) and it is only mere presumption by ld AO . This also clearly shows that said figure of 3609.987 is only land filling charges of Rs. 36,09,987/- and it has to be considered accordingly. 8.4. In response to this, ld DR argued that such page 31 of SSG/8 represented land purchased by assessee which was never reflected in books of account of assessee , failed to prove such presumption of ld AO. ld DR also submitted that since assessee was engaged in real estate and such document read with pg 31 & 33 of SSG/44 proved that assessee has made such purchases in his group Companies, as such same was undisclosed expenses of assessee. 8.5. We have heard rival submissions and perused materials available on record including paper book of assessee filed in that regard. We have gone through material placed particularly following seized documents along with other document was placed in paper book as well as order of lower authorities :-. SSG/8 Pgs 21 & 22 Rs.10,00,000/- Pg 19 Rs. 50,000/- SSG/8 Pg 31 Rs.27,03,31,000/- SSG/44 Pgs 31, 32 & 37 (Rs.26,01,64,000/-+Rs.1,67,000/-) 44 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla As far as addition of Rs. 10,00,000/- & Rs.50,000/- in A.Ys 2006-07 and 2008-09 is concerned we do not find much merit in assessee s contention and hence assessee s ground in such respect fails. As regards sum of Rs. 26,01,64,000/- , assessee s contention that there is no corroborative material to prove allegation by revenue , has substantial merit. On perusal of pg. 8 of SSG/8 and pages 31,32 & 33 of SSG/44 it is very clear that ld AO has done pick and choose job and picked up amount suitable to him and imposed it on entire paper without making any effort to understand documents properly. ld AO even failed to examine fact as to land so mentioned in SSG/44 pages 31, 32 & 33 actually belonged to assessee or not which he could have enquired with Registrar of Assurances since all such details of land were reflected in SSG/44 (being land of Mohammedpur etc.). ld AO conveniently considered same as purchase of land without proper examination of matter. No corresponding verification was carried out in hands of seller of land even though details were very much avaialbel with ld AO. assessee had duly rebutted presumption of loose sheets as representing only land filling expenses and admittedly there is absolutely no evidence brought on record to conclude that same represents amounts paid for purchase of land. We also agree with argument of ld AR that ld AO had resorted to divergent stand on same seized document by one treating it as purchase of land and other treating it as land filling charges, thereby erroneously making addition on both counts. It is pertinent from such documents that value of 2486.20 Cottahs couldn t have become Rs. 36,09,98,700/- for 2950.56 Cottahs from March 2008 to December 2008. As far as contention of assessee to treat (pg 31 of SG/8) as land filling charges, it appears to be credible since revenue s action in that regard is merely on assumption. Even otherwise, revenue failed to bring any evidence on record to prove its finding. Hence ld AO s action in such respect is rejected and do not find any justifiable reason to interfere with finding of ld CITA. As regards revenue s ground in treating Rs. 10,00,000/-, Rs.50,000/-, Rs.1,67,000/- & Rs.36,09,987/- out of available cash , we find merit in fact that that ld AO himself has allowed such set off in assessment order, so revenue cannot be allowed to change its stand now. Even otherwise, revenue is not in possession of any evidence nor it has 45 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla furnished any such fact on record that sums expended were other than out of sum earned / received as cash by assessee. Hence, we concur with order of ld CITA in allowing sums as part of cash flow and as such revenue s ground fails on such account. As result, we hold as follows: Asst year Appeal No. Ground Result Nos. 2006-07 145/K/12 6 Dismissed 34/K/12 8 Dismissed 2008-09 147/K/12 7 Dismissed 36/K/12 6 Dismissed 2009-10 148/K/12 10 Dismissed 37/K/12 5 Dismissed 6 Dismissed Addl. Ground in 1 Dismissed C.O 148/K/12 Addl. Ground in 1 Dismissed 1419/ K/12 9. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SSG /9-39 A.Y 2006-07 C.O 145/Kol/2012 Ground No. 7 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs.12,32,581/- as undisclosed investment of appellant on basis of SSG-9 to 39 and in view of facts and in circumstances action of Lei. CIT (A) in such regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly. A.Y 2007-08 C.O 146/Kol/2012 Ground No. 6 - For that in view of facts and circumstances Ld. CIT (A) erred in confirming action of AO in treating Rs.6,94,299/- as undisclosed investment of appellant on basis of SSG-9 lo 39 and in view of facts and in circumstances action of Ld. CIT (A) in such regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly A.Y 2008-09 C.O 147/Kol/2012 Ground No.8 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs.6,28,500/- as undisclosed investment of appellant on basis of SSG-9 to 39 and in view of facts and in 46 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla circumstances action of Ld. CIT(A) in such .regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly. A.Y 2009-10 C.O 148/Kol/2012 Ground No.11 - For that in view of facts and circumstances Ld.CIT(A) erred in confirming action of AO in treating Rs.86,257/- as undisclosed investment of appellant on basis of SSG-9 to 39 and in view of facts and in circumstances action of Ld. CIT (A) in such regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly. This ground is without prejudice to fact that appellant has shown same as application of income offered by it and hence it may kindly be considered accordingly. A.Y 2006-07 IT(SS) 34/Kol/2012 Ground No. 9- Ld. CIT(A) is erred in directing A.O. to consider unexplained expenditure of Rs.3,60,500/- as unexplained expenditure as per seized document SSG-9-39 against undisclosed cash receipt and that order of Ld. CIT(A) is against provision of section 69C of Act. Ground No. 10 - Ld. CIT(A) is erred in directing A.O. to consider unexplained expenditure of Rs. 8,61,581/- added on basis of seized document SSG/9-39 against undisclosed cash receipt and that order is against 69C of Act. A.Y 2007-08 IT(SS) 35/Kol/2012 Ground No.8 - Ld. CIT(A) is erred in directing A.O. to consider unexplained expenditure of Rs. 6,94,299/- made on basis of seized document SSG/9-39 against unaccounted cash receipt. This is against Section 69C of Act. A.Y 2008-09 IT(SS) 36/Kol/2012 Ground No.7 - Ld. CIT(A) has erred in directing A.O. to consider unexplained expenditure of Rs. 6,28,500/- as per seized document SSG/9-39 against unaccounted cash receipt of assessee. A.Y 2009-10 IT(SS) 37/Kol/2012 Ground No. 7 - Ld. CIT(A) has erred in directing A.O. to consider unexplained expenditure as per seized document SSG/9-39 of Rs. 86,257/- against accounted cash receipt of assessee. 47 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 9.1. brief facts of this issue are that ld AO found that seized material marked SSG/9 to SSG/39 is small pocket diaries containing detail of payments made to different labour contractors in respect of projects undertaken by group companies which was not recorded in their regular books of account. ld AO has noted in assessment order that assessee has himself admitted undisclosed expenses of Rs.20,000/-, Rs.1,45,000/-, Rs.3,80,500/-, Rs.3,70,500/-, Rs.6,94,299/-, Rs.6,28,500/- and Rs. 86,257/- in Asst Years 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 respectively. ld AO also found that undisclosed expenses of Rs.15,55,000/- and Rs.8,61,581/- related to Asst Years 2005-06 and 2006-07 was recorded in seized documents SSG/10, 16 32 & 35. It was contended before ld AO that these expenses relate to Saltee Infotex (P) Ltd. However said company denied having any connection with such expenses. ld AO concluded that expenses relate to assessee. ld AO thus made additions of Rs.20,000/-, Rs.1,45,000/-, Rs.3,80,500/-, Rs.3,70,500/-, Rs.6,94,299/-, Rs.6,28,500/- and Rs. 86,257/- in Asst Years 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 as undisclosed expenditure on basis of seized documents marked SSG/9 to SSG/39. order of ld AO is reproduced as under :- SSG/9 to SSG/39 are small pocket diaries which contains details of payment made to different labour contractor / contractors. main contractors were T.T. Constructions, R.K. Nayer, Bablu Mondal, Hanuman Prasad, Jioan Ram, Dayanand Thakur, BSR Constructions Company, Sankar, S. R. Construction etc. assessee vide Annexure J to letter dt. 11.11.2010 admitted undisclosed expenditure on account of labour payment amounting to Rs. 23,25,056/-. However, in respect of labour payment on project DN-9, assessee claimed that payments were made by Saltee Infotex and not related to us. However, during assessment proceedings u/s 153A, M/s Saltee Infotex denied payment of such expenses. Since these diaries are found from possession of Sri Surya Prakash Bagla and his group companies, same is presumed to be expenses of Sri Surya Prakash Bagla and not disclosed in regular basis. year wise total of labour payment on DN-9 is as under : - F.Y 2004-05(A.Y 2005-06) F.Y 2005-06 (A.Y 2006-07) SSG/10 (R. K. Narayan) Rs.30,000/- Rs.37,000/- SSG/16 (Bablu Mondal) Rs.90,000/- Rs.95,000/- SSG/32 ( S. R. Construction Rs.14,00,000/- Rs.6,79,581/- ) SSG/35 (Monoranjan Rs.35,000/- Rs.50,000/- Baraui) Total Rs.15,55,000/- Rs.8,61,581/- 48 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla Therefore, total undisclosed expenses are worked out : Undisclosed F.Y A.Y As per As per Total Application/ assessee s discussion Expenses admission vide letter dt. 11.11.10 2002-03 2003-04 20,000/- - 20,000/- 2003-04 2004-05 1,45,000/- - 1,45,000/- 2004-05 2005-06 3,80,500/- 15,55,000/- 19,35,000/- 2005-06 2006-07 3,70,5010/- 8,61,581/- 12,32,081/- 2006-07 2007-08 6,94,299/- - 6,94,299/- 2007-08 2008-09 6,28,500/- - 6,28,500/- 2008-09 2009-10 86,257/- - 86,257/- [Undisclosed expenditure for A.Y 2003-04 Rs. 20,000/-] [Undisclosed expenditure for A.Y 2004-05 Rs. 1,45,000/-] [Undisclosed expenditure for A.Y 2005-06 Rs. 19,35,000/-] [Undisclosed expenditure for A.Y 2006-07 Rs. 12,32,081/-] [Undisclosed expenditure for A.Y 2007-08 Rs. 6,94,299/-] [Undisclosed expenditure for A.Y 2008-09 Rs.6,28,500/-] [Undisclosed expenditure for A.Y 2009-10 Rs. 86,257/-] 9.2. ld CITA observed following:- I have perused assessment order and considered submissions of appellant, and also, material on record. has mentioned in assessment order that seized documents SSG/9-39 contain payments to labour contractors amounting to Rs. Rs.20,000/-, Rs.1,45,000/-, Rs.3,80,500/-, Rs. 3,70,500/-, Rs.6,94,299/-, Rs.6,28,500/- and Rs.86,257/- in AY 2003-04, 2004-05, 2005-06, 2006-07, 2007- 08, 2008-:09 and 2009-10 which was admitted by appellant as his undisclosed expenses; and, has also been included in his statement of cash flow. I find from perusal of cash flow statement that two expenses of Rs. 5,000/- each booked in AY 2006-07 actually pertain to AY 2005-06 as they were incurred on 05-03-2005 and 25-03-2005. Consequently, correct figures of undisclosed expenses pertaining to AY 2005-06 and 2006-07 should be Rs.3,90,500/- and Rs.3,60,500/- (instead of Rs.3,80,500/- and Rs,3,70,500/- as mentioned in assessment order). It was contended that undisclosed expenses were incurred out of undisclosed receipts already declared to department, and so, consequential relief should be allowed. Since expenses of Rs.20,000/-, Rs.1,45,000/-, Rs.3,90,500/- pertain to AY 2003-04, 2004-05 and 2005- 06 when there was no undisclosed receipts, these additions are confirmed. However, as undisclosed expenses of Rs.3,60,500/-, Rs.6,94,299/-, Rs.6,28,500/- and Rs.86,257/- relate to AY 2006-07, 2007-08, 2008-09 and 2009-10, they could possibly be' covered by undisclosed receipts. AO is directed to consider these expenses as part of cash flow statement and consider net of expenses, if any, for purposes of addition. 49 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla AO has mentioned in assessment order that undisclosed expenses of Rs.15,55,000/- and Rs.8,61,581/- related to A.Y 2005-06 and 2006-07 was recorded in seized documents SSG/10, 16, 32 & 35. It was contended before AO that expenses were related to Saltee Infotex (P) Ltd but then, same was denied by said company. appellant thus failed to support its contention. I find that appellant is in control of his group companies; and, has also admitted undisclosed receipts as well as undisclosed expenses of group companies in his own case, I am therefore not inclined to accept argument that expenses contained in seized documents SSG/10, 16, 32 & 35 are not assessable in hands of .appellant. However, these undisclosed expenses are to be considered as being made out of undisclosed receipts as shown by appellant, and also accepted by AO. cash flow statement .had been filed before .the AO in respect of unaccounted income which mainly comprised of cash received on different dates from Fort Group in connection with sale of shares. As there is undisclosed receipts in AY 2005-06, addition of Rs.15,55,000/- in AY 2005-06 is sustained. However, AO is directed to consider net of unexplained expenses of Rs.8,61,581/-, if any, for purposes of addition. 9.3. ld AR merely submitted that undisclosed expenditure be allowed to be set off from cash available out of undisclosed income as per date of expenses and availability of cash. ld DR opposed contention of ld AR for reasons mentioned earlier. 9.4. We have heard rival submissions and perused materials available on record including paper book submitted by assessee in that regard. As regards revenue s ground in treating Rs. 8,61,500/-, Rs.3,60,500/-, Rs.6,28,500/- & Rs.86,257/- out of available cash, we find merit in fact that that ld AO himself has allowed such set off in assessment order so revenue cannot be allowed to change its stand now. Even otherwise, revenue is not in possession of any evidence nor it has furnished any such fact on record that sums expended were other than out of sum earned / received as cash by assessee. Hence, we concur with order of ld CITA in allowing sums as part of cash flow and as such revenue s ground fails on such account which amounts to disputing its own earlier action and which is not permissible as per law. As result, we hold as follows: Asst year Appeal No. Ground Result Nos. 2006-07 145/K/12 7 Dismissed 34/K/12 9 & 10 Dismissed 2007-08 146/K/12 6 Dismissed 35/K/12 8 Dismissed 50 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 2008-09 147/K/12 8 Dismissed 36/K/12 7 Dismissed 2009-10 148/K/12 11 Dismissed 37/K/12 7 Dismissed 10. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED AS SSG / 42 A.Y 2007-08 C.O 146/Kol/2012 Ground No.7 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs.50,64,383/- as alleged seized document SSG-42 & and in view of facts and in circumstances action of Ld. CIT (A) in such regard is without appreciating facts in matter properly and in view of facts and in circumstances it may kindly be held accordingly. A.Y 2007-08 IT(SS) 35/Kol/2012 Ground No. 9 - Ld. CIT(A) is erred in directing A.O. to consider unexplained expenditure of Rs. 50,64,383/- as per seized document page no.4 SSG/42 against unaccounted cash receipt. A.Y 2008-09 IT(SS) 36/Kol/2012 Ground No. 8 - Ld. CIT(A) has erred in deleting addition of Rs. 5,89,47,000/- as undisclosed investment as per page No. 6 of seized document SSG/42. A.Y 2009-10 IT(SS) 37/Kol/2012 Ground No.8 - Ld. CIT(A) erred in deleting addition of Rs. 1,30,00,000/- made as unexplained investment on basis of seized document page 6. SSG/42. 10.1. brief facts of this issue are that ld AO has mentioned in assessment order that page 6 of seized documents marked SSG/42 contains account of one Kishanji . ld AO interpreted seized document as containing detail of investment in different places or projects. It also appeared to ld AO that figures were written in lakhs of rupees. ld AO concluded that page 6 of seized document involves undisclosed investment of Rs. 7,19,47,000/- (comprising Rs. 5,89,47,000/- in Asst Year 2008-09 and Rs. 1,30,00,000/- in Asst Year 2009-10). He noted that it was for assessee to explain nature of transactions as recorded in seized document as it was recovered from him. As there was no proof regarding genuineness of Kishanji, ld AO held that sum of 51 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla Rs. 7,19,47,000/- had to be treated as undisclosed investment of assessee. ld AO thus made addition of Rs. 5,89,47,000/- in Asst Year 2008-09 and Rs. 1,30,00,000/- in Asst Year 2009-10 on account of undisclosed investment. 10.2. ld AO further noted that page 4 of SSG/42 contains detail of expenditure incurred upto 20.3.2008 in Jessore Road Project. ld AO has mentioned in assessment order that assessee has admitted undisclosed expenses of Rs.12,64,383/- which was included in statement of cash flow. However, same was determined by reducing sum of Rs.38,00,000/- on ground that same had already been considered as undisclosed income under seized document SSG/3. ld AO observed that entries in SSG/3 did not match and consequently no set off for Rs. 38,00,000/- could be allowed. ld AO thus held that sum of Rs. 50,64,383/- had to be treated as undisclosed expenses of assessee. ld AO further noted that page 23 to 37 shows undisclosed expenses of Rs. 45,456/- which was admitted by assessee. ld AO further noted that pages 23 to 37 shows undisclosed expenses of Rs.45,456/- which was admitted by assessee, and, has also been included in .statement of cash flow. ld AO thus made addition of Rs.50,64,383/- and Rs.45,456/- as undisclosed expenses in Asst Year 2007-08 and Asst Year 2008-09. order of ld AO is reproduced as under:- Page 6 of SSG/42 is account of one 'Shri Kishanji' in which detail of investment at different places/projects has been mentioned. It appears that figures written on this page are in lakhs of rupees. assessee submitted vide annexure M to letter dt. 11.11.2010 as not related to us . documents were found in assessee s possession. Onus is upon assessee to explain transactions. In absence of proof of genuineness regarding kishanji total investment is considered in hand of assessee. Therefore, amount of Rs. 7,19,47,000/- including cash of Rs. 4,82,00,000/- (other than those mentioned as Ch meaning cheque) has been treated as undisclosed investment by assessee as per dates mentioned in seized page as below : - Therefore year-wise addition will be :- Payment / Application F.Y 2007-08(A.Y 2008- F.Y 2008-09 (A.Y 2009-10) 09) Rs. 5,89,47,000/- Rs. 1,30,00,000/- Page 4 of SSG - 42 contains details of expenditure incurred at Jessore Road 52 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla Project up to 20,03.2008. assessee admitted following undisclosed- expenditure vide Annexure M' & M2' attached to letter dt.11.11.2010 to tune of 12,64,383/- has been arrived at by reducing 38,00,000/- on ground that undisclosed income of Rs.38,00,000/- has already been considered in SSG/3. assessee's explanation is examined. disclosure for SSG/3 cannot be matched with entries with seized document. Accordingly, undisclosed income and expenditure from this seized document comes to Rs.50,64,383/- for A.Y 2007 - 08. Pages 23 to 37 further shows expenses, out of which Rs. 45,456/- has been admitted as undisclosed for A.Y 2008-09. [Undisclosed expenditure for A.Y 2007-08 Rs. 50,64,383/-] [Undisclosed expenditure for A.Y 2008-09 Rs.5,89,92,456/-] [Undisclosed expenditure for A.Y 2009-10 Rs. 1,30,00,000/-] 10.3. ld CITA observed as follows:- I have perused assessment order and considered submissions of appellant, and also, material on record. AO has mentioned in assessment order that page 4 of seized documents SSG/42 contain detail of expenses of Rs.12,64,383/-, and, that page 23 to 37 record expenses of Rs.45,456/- which was admitted by .appellant as undisclosed expenses in AY 2007-08 and 2008-09, and, was also included in statement of cash flow. AO has also noted that expenses of Rs.12,64,383/- was arrived at by reducing Rs.38,00,000/- on ground that it was already considered in SSG/3. appellant has produced no evidence to substantiate his claim. I am therefore unable to accept argument that Rs.38,00,000/- had already been considered under SSG/3. However, as undisclosed expenses are to be considered against undisclosed income, AO is directed to treat undisclosed expenses of Rs.50,64,383/- (Rs.12,64,383/- plus Rs.38,00,000/-) and Rs.45,456/- as part of cash flow statement, and then, consider net of expenses, if any, for purposes of addition. It was argued before me that seized document SSG/42 was not seized from possession or custody of appellant; and further, there was no material on record to suggest that appellant had made investment in different places or projects as mentioned by AO in assessment order. Ld. A/R explained that page 6 of SSG/42 contains certain details under head Kishanji Account . It was argued that AO has made too many presumptions and assumptions about seized document. For, AO has presumed that seized document contains details of investment which is nowhere mentioned in seized document. seized document has simply mentioned Kishanji Account . It has nowhere mentioned that account relates to investment in places or projects. But then, without any basis, AO has presumed that it pertains to investment. AO has nowhere explained in assessment order as to why he believes that figures written on said document represented investment. AO has made further presumption without any basis that figures are mentioned in lakhs. AO has mentioned in assessment order that - It appears that figures written on this page are in lakhs 53 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla of rupees . Ld. A.R argued that very language used by AO only suggests that AO is himself not sure about facts. There was no reason or basis or justification for AO to hold that figures are in lakhs of rupees. Ld. A.R has further argued that seized document has to be considered and believed in totality. When it was mentioned in seized document itself that it contained account of Kishanji AO was not justified in presuming, and that too, without any basis that seized document was related to appellant. AO has made no efforts to locate or examine Kishanji with whom seized document is possibly related. I find substance in argument that AO has brought no corroborative material on record to show that account of Kishanji as mentioned in SSG/42 was in anyway related to appellant or even to this group companies. There is no positive material on record to link account of Kishanji either with regular books of account of appellant or his group companies or with seized documents found in search. Without establishing any nexus, AO cannot presume that account of Kishanji was related to investment made by appellant. seized document does not mention name of appellant or his group companies. On contrary, it specifically mentions that account pertains to Kishanji. In this factual background, AO had no legal sanction or authority to presume that period seized document relates to appellant without bringing any corroborative material or evidence on record. Also, there is no material to show that seized document actually represents detail of investment. It is only presumption of AO that figures written on page 4 of SSG/42 are in lakhs of rupees. conclusion of AO that appellant has made undisclosed investment of Rs. 7,19,47,000/- is not supported by any material or evidence on record; on contrary, it is based only on imagination of AO. decisions made by AO are not based on proper findings. AO has made his conclusions more from his presumptions and assumptions than from material facts. In view of above, I am of opinion that addition of Rs. 7,19,47,000/- (comprising Rs. 5,89,47,000/- in A.Y 2008-09 and Rs. 1,30,00,000/- In A.Y 2009-10) on account of undisclosed investment is neither sustainable in law nor on facts; and so, same is directed to be deleted. 10.4. ld AR argued following :- (i) He submitted that ld AO had made two additions being as follows: Pg 6 of SSG/42 Assessment year : 2008-09 Rs.5,89,92,456/- Assessment year : 2009-10 Rs.1,30,00,000/- Rs.7,19,92,456/- & page 4 of SSG/42 A.Y. 2007-08 Rs.50,64,383/- (ii) As regards pg. 4 of SSG/42 it represented accounts pertaining to Jessore Road project which was accounted for in books of respective Company. However, to buy peace out of such sum of Rs.50,64,383/-, Rs. 38,00,000/- had already been offered under SSG/3 and hence only Rs. 12,64,383/- can be added. ld AR also drew our attention to annexure M-1 & M-2 of letter dt. 11.11.2010 which were at page 1085 & 1086 of paper book No.8 54 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla and hence addition, if any, be restricted only upto Rs. 12,64,383/-. (iii) As regards page 6 of SSG/42 is concerned, he submitted that such document doesn t pertain to it nor it is aware of contents of such document and rather it pertains to some Kishanji as mentioned in such document. (iv) He submitted that is mere assumption & presumption on part of ld AO to hold that contents of such page 6 are that of assessee and ld AO even presumed that same is in Lakhs and/ or it represents unexplained expenditure without any corroborative material in such respect and / or without making any effort to make any enquiry during search subsequently. (v) He submitted that presumption u/s 292C is not mandatory presumption and rather discretionary presumption. Section 292C uses expression may be presumed and as such it is rebuttable presumption. He submitted that such page 6 was mere loose sheet found at premises searched. But it was neither under possession nor under control of assessee and nor its contents are corroborated or linked with assessee in any manner and hence it cannot be treated as conclusive evidence merely because it was found at searched premises. He also relied on judgment of Hon ble Kerala High Court in ITO v. Abdul Majeed 169 ITR 440 (Ker) and in such respect and also submitted that same has been followed by Coordinate Bench of this tribunal in case of Rajesh Kr. Kankaria in ITA No. 70/ Kol/2009 dt. 25.6.2010. (vi) He concluded by stating that page 6 is rather dumb document and addition in such respect by treating same as unexplained expenditure is bad in law. (vii) As regards ld CITA s action in allowing set off of expenses so incurred by assessee and / or its associates, it was submitted by ld AR that there is no dispute in fact that assessee had received cash on account of transaction with Fort to tune of Rs. 7,40,90,000/- and also other receipts which was available with assessee and expenses were out of such sums only and hence ld CITA was fully justified in allowing such set off. He also submitted that on perusal of assessment order itself , it can be observed that ld AO himself has allowed such set off and now revenue is disputing such action which amounts to disputing its own earlier action and which is not permissible as per law. 55 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 10.5. In response to this, ld DR argued that assessee is accepting one part of said documents SSG/42 as its own and denying ownership and content of another part i.e. page 6 of SSG/42 which is anomaly by itself and such conduct proves that document has to be treated in entirety along with other document in SSG/42 and action of ld AO be affirmed. Moreover, seized document was found in premises of Saltee Construction Co P Ltd as recorded in page 4 of order of ld AO. same seized document resulted in addition of Rs. 50,64,383/- which was confirmed by ld CITA. 10.6. We have heard rival submissions and perused materials available on record including paper book of assessee submitted in that regard. As regards page 4 of SSG/42, we find that assessee has accepted Rs. 38,00,000/- being part of SSG/3 and pleaded to add only Rs. 12,64,383/-. However, assessee has failed to point out at which document in particular in bunch SSG/3 such sum of Rs. 38,00,000/- has been disclosed. In absence of same , we have no option other than to affirm action of ld AO in treating entire sum of Rs. 50,64,383/- as undisclosed expenditure only. 10.6.1. As regards page 6 of SSG/42, we find that ld AO has presumed that document belongs to assessee and / or its contents pertain to assessee. In this regard, we find that point is whether presumption u/s 292C shall be treated as mandatory under law or whether it shall be treated as rebuttable presumption and whether, even mandatory presumption about documents as belonging to assessee has conclusive consequence of making addition in manner in which assessment order has done it. In this context, following observations of Hon ble Apex Court in case of P.R. Metrani vs. CIT reported in (2006) 287 ITR 209 at page 220 about three types of presumptions under law are relevant:- presumption is inference of fact drawn from other known or proved facts. It is rule of law under which courts are authorized to draw particular inference from particular fact. It is of three types, (i) "may presume", (ii) "shall presume" and (iii] "conclusive proof . "May presume" leaves it to discretion of court to make presumption according to circumstances of case. "Shall presume" leaves no option with court not to make presumption. court is bound to take fact as proved until evidence is given to disprove it. In this sense such presumption is also rebuttable. "Conclusive proof' gives artificial probative effect by law to certain facts. No evidence is allowed to be produced with view to combating that effect. In this sense, this is irrebuttable presumption. 56 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla words in sub-section (4A) of section 132 are "may be presumed". presumption under sub-section (4A), therefore, is rebuttable presumption. finding recorded by High Court in impugned judgement that presumption under sub-section (4A) is irrebuttable presumption in so far as it relates to passing of order under sub-section (5) of section 132 and rebuttable presumption for purpose of framing regular assessment is not correct. There is nothing either in section 132 or any other provisions of Act which could warrant such inference or finding." 10.6.2. In our considered opinion, this is judgement which made introduction of Section 292C of Act with retrospective effect necessary as matter of clarification. Nevertheless, limited conclusion is that language of section 132(4A) of Act and of section 292C of Act use common expression "may be presumed". Consequently opinion of Hon'ble Supreme Court about presumption being rebuttable presumption in light of such expression is applicable to section 292C of Act as well. We have to consider what presumption is permitted in respect of seized documents under consideration. From perusal of seized documents, we find it contains transactions of receipts and payments both in cash and by cheque. name of party stated is Kishanji . paper does not refer to assessee and there is no way in which expressions about parties in documents can be related to assessee nor ld AO has given any finding in such respect. presumption u/s 292C of Act are that document belongs to persons from. whose possession and control it was found. second presumption is that contents of such documents are true. third presumption is that signature and handwriting shall be taken to be that of person from whom documents were found. It would be relevant now to decide as to how to deal with documents with first two presumptions? documents belong to assessee has not been proved. contents are true has also not been corroborated. dispute is : what are contents? Is it permissible to draw inference against assessee on his failure to explain contents of documents after presuming that contents are correct? This question is outside rebuttable presumption made under section 292C of Act. legal presumption does not permit inference that Kishanji is none other than assessee or his representatives. search action at premises have not yielded any material which might justify such inference. It is not legally correct to hold that adverse inference against assessee unless assessee explained contents of documents. In our opinion, even after presumption applied to facts u/s 292C of Act, there is no adequate material to conclude that transactions in seized documents are 57 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla transactions of assessee which remained undisclosed. other aspects of matter is that presumption u/s 292C of Act is rebuttable presumption and they don't lead to conclusive evidence. assessee, under principles of natural justice, has right to rebut presumption. Under that right also he is entitled to state that transactions belonging to him are not recorded under any name as Kishanji . In our opinion, information about undisclosed expenditure, assessee is based on inadequate or irrelevant material. Under circumstances this ground of appeal is dismissed. As regards revenue s ground in treating Rs. 50,64,383/- out of available cash, we find merit in fact that that ld AO himself has allowed such set off in assessment order, so revenue cannot be allowed to change its stand now. Even otherwise, revenue is not in possession of any evidence nor it has furnished any such fact on record that sums expended were other than out of sum earned / received as cash by assessee. Hence, we concur with order of ld CITA in allowing sums as part of cash flow and as such revenue s ground fails on such account. As result, we hold as follows: Asst year Appeal No. Ground Result Nos. 2007-08 146/K/12 7 Dismissed 35/K/12 9 Dismissed 2008-09 36/K/12 8 Dismissed 2009-10 37/K/12 8 Dismissed 11. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED AS SSG / 45 A.Y 2007-08 C.O 146/Kol/2012 Ground no. 8 - For that in view of facts and circumstances Ld.CIT(A) was wholly unjustified in confirming addition of Rs.79,82,640/- on basis of SSG- 45 without appreciating fact that said document contained mere working of un materialized Joint Venture and in view of facts and in circumstances it may kindly be held accordingly. This ground is being taken without prejudice to fact that AO had been directed to delete addition on basis of rotation statement. A.Y 2007-08 IT(SS) 35/Kol/2012 58 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla Ground No. 10 - Ld. CIT(A) is erred in directing A.O. to consider unexplained expenditure of Rs.79,82,640/- as per page no. 43 of seized document SSG/45 to consider it against unaccounted cash receipt of assessee .The order is against provision of section 69C of Act. A.Y 2008-09 IT(SS) 36/Kol/2012 Ground No. 10 - Ld. CIT(A) has erred in deleting addition of Unexplained investment of Rs. 5,00,00,000/-as per page No. 40 of seized document SSG/45. 11.1. brief facts of this issue are that ld AO found that page 43 of seized document SSG/45 contains detail of unexplained expenditure of Rs. 79,82,640/- which had been admitted by assessee, and, was also included in statement of cash flow. ld AO thus made addition of Rs.79,82,640/- as undisclosed expenses in A.Y 2007-08 on basis of page 43 of seized document marked SSG/45. 11.2. ld AO also referred to page 40 of SSG/45. ld AO has inferred from said document that assessee and three other persons have received amount of Rs. 22.75 crores. ld AO also concluded that assessee along with other persons had taken over company for which sum of Rs. 8.71 crores was paid. It was explained before ld AO that seized document contains valuation of shares and working of joint venture which did not materialize. ld AO has noted in assessment order that no evidence was produced before him to show that there was no takeover of company or that no transaction was actually made. ld AO then concluded by stating that figure of Rs.5 crores written against assessee is treated as undisclosed investment made by him in cash in A.Y 2009-10. order of ld AO is reproduced as under :- Page 43 of SSG/45 is statement is receipt and payment account for period July 2006 to September 2006, where some receipt and payment has been shown in cash and cheque. assessee vide Cash flow statement of undisclosed transactions being Annexure X of letter dated 11.11.2010 and vide Annexure U being break- up of undisclosed income admitted Rs. 79,83,640/- as undisclosed expenditure of A.Y 2007-08. For remaining amount, assessee explained it to be part of regular books of various companies mentioned therein. assessee produced bank statement of various companies including their audited final accounts and copy of IT returns, Cash flow statements. It was submitted that cash for land purchases were done by withdrawals of cash from bank itself and wherever assessee could not link cash expenditures with bank withdrawals, necessary disclosures have been 59 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla made. SSG/45, Page 43 is account given by broker. left side shows amount received by broker and right side shows amount expended by broker. receipt side and inter-alia shows Cash received by broker of Rs.6,60,00,000/- . This figures has been reconciled period wise from account of various Companies and as evident from workings of Annexure P2 of letter dt.11.11.2010, sum of Rs.6,08,50,000/- was withdrawn from Bank Account of five companies on whose name land was acquired, as mentioned in right side of seized documents. sum of Rs.70,50,000/- could not be backed by Bank withdrawals and treated as undisclosed . Besides this, page contains receipt of Rs. 9,32,640/- which could not be reconciled with regular books ad hence same was also offered as undisclosed . As such, sum of right side of this page shows land value and other expenses incurred by broker which was reconciled with books. sum of Rs. 18,09,946/- could not be reconciled. Page 40 of SSG/45, contains details money consideration receipt and detail of cash / cheque receipt. It appears that total consideration of Rs. 8 Crores has been received as sale consideration and after reducing loan liability to 5 different concerns, profit of Rs. 3,90,56,668/- is remaining. In 2nd half of page 40 of SSG/45, statement containing records of cash of Rs. 14.04 crores and cheque of Rs. 8.71 crores had been written. As per this page assessee, Sri Surya Prakash Bagla along with other three parties received Rs. 22.75 crores. assessee in his explanation stated that page contains valuation of shares and working of joint venture which did not materialize. However, it appears that assessee along with other parties purchased company after paying Rs.8 crores as consideration and for takeover of this company along with incidental expenses totaling to Rs. 8.71 crores because mention of loan creditors as Adyama Nirman, Bishnu Nirman, Bishnupriya Plaza, Gayatri Plaza, Kartick Plaza cannot be treated as imaginary. It is found from working pages, bank statement of Saltee Infrastructure, Parimala Mercantiles etc. that on 5.9.2007, M/s Saltee Infrastructure Ltd., company controlled by assessee paid Rs. 1,00,00,000/- vide cheque No. 293330 drawn on ABN Amro Bank to M/s Shree Adyama Nirman Pvt. Ltd., company mentioned in above referred documents and it is shown as advance against properly in balance sheet of Shree Adyama Nirman Pvt. Ltd. During F.Y 2006-07, Shree Adyama Nirman Pvt. Ltd., of Embassy 1-B, 4, Shakespeare Sarani of Assurances II, Kolkata 17.5.2006 for Rs. 6,00,000/-, 20.5.2006 for Rs. 10 lakhs, 21.7.2006 Rs. 10 lakhs [all payments made to Prasant Dey and Amal Chakraborty] and on 7.9.2000 for Rs. 5,16,327/- to Dum Dum Municipality for Development fees & Mutation fees. All money as above had been received from M/s Saltee Infrastructure on 5.9.2007 is also perfect match cheque portion of Rs. 1.04 crores written against SPB in this page 40 of SSG/45. 60 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla assessee has not provided any details regarding this company nor any evidence to prove that company was not taken over and no transactions were made. Therefore, figure of Rs. 5 Crores written against assessee is treated undisclosed investment of assessee in cash for A.Y 2009-10. [Undisclosed expenditure for A.Y 2007-08 Rs. 79,82,640/-] [Undisclosed expenditure for A.Y 2008-09 Rs.5 Crores] 11.3. ld CITA observed as follows:- I have perused assessment order and considered submissions of appellant and also, material on record. AO has mentioned in assessment order that page 43 of seized documents SSG/45 contain detail of undisclosed payments Rs.79,.82,640/- which was admitted by appellant as undisclosed expenses in A.Y 2007-08, and, was also included in the; statement of cash flow. I uphold order of AO that payments of Rs.79,82,640/- was to be considered in case of appellant as undisclosed expenses. However, as undisclosed expenses are to be considered against undisclosed income AO is directed to treat undisclosed expenses of Rs.79,82,640/- as part of cash flow statement, and then, consider net of expenses, if any, for purposes of addition. Ld A/R has argued before me that, in his own assessment order, AO has given contradictory findings with reference to seized document at page 40 of SSG/45. For, on one hand, AO has stated that appellant along with other persons had received sum of Rs.22.75 crores. And subsequently, he has concluded that appellant along with other persons had taken over company by assessing sum of Rs. 8.71 crores. For, I find that AO has taken diagonally opposite positions in interpreting same seized document / (page 40 of SSG/45). It was argued that name of appellant was nowhere mentioned in seized document which only states as under : - RAM 1 SPB 2 KEJ 2 But, AO has presumed that SPB meant Surya Prakash Bagla (the appellant), AO has merely added said figure of 2 + 2 + 1 = 5; and then, interpreted that figure 5 actually represents 5 crores. AO eventually held that entries made on seized document suggest that along with others, appellant has taken-over company by investing Rs.5 crores. I find merit in argument that there is neither any evidence nor corroborative material to justify finding of AO. It was argued in course of appellate proceedings that there could have been proposal or negotiation for transfer of such 5 companies in A.Y 2008- 09; and, in case deal was' finalized, transaction would have been made as suggested in seized document. But then, deal having not materialized, there was no question of receipt or payment of any consideration. Hence, addition based on presumptions and assumptions of AO that appellant acquired or sold 61 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 5 companies in AY 2008-09 cannot be sustained. It was also argued that when 1 was written against RAM, 2 against SPB and 2 against KEJ, there was no basis for AO to presume that entire consideration was received or paid by SPB alone, Ld A/R has further argued that AO ha mentioned in assessment order that appellant had received RS.14.04 crore in cash and Rs.8.71 crore by cheque. But then, AO has not been able to substantiate or corroborate receipt of cheque with reference to books of account or bank statement of appellant. I find from assessment order that AO has made addition of Rs.5 crores, with reference to seized document at page 40 of SSG/45 on ground that appellant along with other persons had taken over company. AO has noted in assessment order that no evidence was produced before him to show that there was no take-over of company or to show that no transaction was actually made. But then, such non-compliance cannot be made basis for concluding that there was take-over of company, Whether or not company was taken-over is matter of fact, and also, matter of public record. AO could have called for annual return of companies filed before ROC. A.O could have verified from the.list of share-holders whether or not there was any change in share-holding pattern of concerned companies. But, AO has made no efforts to ascertain facts. AO bas brought no positive material or evidence on record to establish that there was take-over of any company by appellant. AO has simply presumed, without any basis, that .the appellant had taken-over company, and then, has drawn his own conclusions. I find that AO had made no efforts to verify facts; and, that there is no material whatsoever to support finding of AO. Even in course of remand proceedings, AO has failed to bring any material on record to support his findings. I therefore directed appellant in course of appellate proceedings to produce Audited Accounts of 5 companies (mentioned in seized document) for period ending 31-03-2008, 31-03-2009 and 31-03-2010; and, list of-share-holders along with copy of Annual Returns as filed before ROC. On perusal of such documents, I find that contention of appellant was factually correct. There was no change in share-holding pattern and there was no take-over of any 'company. AO had drawn his conclusions on basis of presumption that appellant along with others had taken-over company. But, once appellant has been able to establish that there was no take-over of any of 5 companies that was mentioned 'in seized documents, all subsequent conclusions and findings of AO have fallen flat. 'In view of above, I am of considered opinion that AO has made addition of Rs.5 crores purely on presumptions and assumptions; that findings of AO as contained in the-assessment, order are self-contradictory that there is no material or evidence on .record to support action of AO; and also, that decisions as made by AO are contrary to facts of case and material available on record. addition of Rs.5 crores in AY 2008-09 is directed to be deleted. 11.4. ld AR submitted that assessee has already admitted undisclosed expenses of Rs. 79,82,640/- as contained on page 43 of seized documents SSG/45. But, as these expenses have already been included in statement of cash flow, no addition can be made 62 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla on this ground. It was argued that ld AO was therefore not justified in making addition of Rs. 79,82,640/- in Asst Year 2007-08. 11.4.1. Ld. A.R further submitted that ld AO was totally confused in so far as interpretation of seized document at page 40 of SSG/45 was concerned. On other hand, ld AO has stated that assessee along with three other persons had received sum of Rs. 22.75 crores. And, subsequently, he has concluded that assessee along with other persons had taken over company by investing sum of Rs. 8.71 Crores. ld AO has also made many observations which are totally irrelevant to facts of case. ld AO has mentioned in assessment order that no evidence was produced before him to show that there was no takeover of company or that no transaction was actually made. But then, what material ld AO had brought on record to establish that company was taken over by assessee? companies are required to file annual returns with ROC which could have been summoned by ld AO. ld AO could have easily verified that no company was taken over as there was no change in shareholding pattern. ld AO made no efforts to ascertain facts or to verify contention of assessee. ld AO has simply presumed, without any basis, that assessee had taken over company, and then, concluded by stating that figure of Rs. 5 crores written against SPB along with others is treated as undisclosed investment made by him in cash in Asst Year 2009-10. ld AR contended that there was no positive material on record to show that there was takeover of any company. On contrary, finding of ld AO was factually incorrect, and also, contrary to evidence on record. He filed copy of annual returns filed before ROC along with list of shareholders for 5 companies as mentioned in seized document to show that there was no change in shareholding pattern. 11.4.2. He submitted that addition is on following sums and documents : i) Page 43 SSG/45 Rs. 79,82,640/- ii) Page 48 SSG/45 Rs. 5,00,00,000/- 11.4.3. He submitted that addition on basis of page 43 is merely on confessional statement and as such addition may kindly be not sustained. 11.4.4. He then submitted that page 45 of SSG/43, it will be seen that several people 63 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla combined together perhaps to acquire company having 50,000 shares @ 781.13 per share but deal might not have materialized and he submitted that it was mere planning document which never happened actually. At least, name of 4 (four) persons appear on second part of such seized document on which reliance has been placed by ld AO for making addition of Rs 5 crores. ld AO has unnecessarily confused himself with SPB which ld AO has taken to represent Surya Prakash Bagla, which may be representing Shri Shree Prakash Bagla and or any other person by this abbreviation and not Surya Prakash Bagla. ld AO has unnecessarily placed great reliance on amounts of liabilities which is reflected in books of certain companies. Since company proposed to be acquired and which ultimately was not acquired and might be having such liabilities in their books of account but it does not prove in anyway that such company which such liabilities were accounted for had been actually acquired by assessee. Moreover and even otherwise there being no date nor any year, under no circumstances, it could be presumed as that relating to Asst Year 2008-09. ld AO even never examined such companies before coming to such wild conclusion. Moreover, ld AO has brought no evidence on record to prove that any company was acquired or sold by your assessee. 11.4.5. In any case without prejudice and even otherwise, SPB could never mean Surya Prakash Bagla only and as stated above it might mean Shri Shree Prakash Bagla and any other person with such abbreviation also. Moreover, it will be seen from paper seized in name of SPB it is only Rs. 2/- which ld AO has presumed to be Rs.2 Crores whereas another 2 appears in name of KEJ and Re.1/- in name of RAM and hence assessee fails to understand as to how entire 1 + 2 + 2 could be treated as unaccounted expenditure of SPB. Under no circumstances, in case of SPB it could exceed Rs. 2/- but that SPB was not assessee. 11.4.6. ld AR also drew attention to pages 1279, 1280, 1281, 1282, 1283 and then 1317, 1395, 1475, 1555 of paper book No.10 to strengthen his contention that there is no change in shareholding of such companies and hence ld AO s contention is even otherwise only assumption. 11.4.7. As regards ld CITA s action in allowing set off of expenses so incurred 64 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla by assessee and / or its associates, it was submitted by ld AR that there is no dispute in fact that assessee had received cash on account of transaction with Fort to tune of Rs. 7,40,90,000/- and also other receipts which was available with assessee and expenses were out of such sums only and hence ld CITA was fully justified in allowing such set off. ld AR also submitted that on perusal of assessment order itself it can be observed that ld AO himself has allowed such set off and now revenue is disputing such action which amounts to disputing its own earlier action and which is not permissible as per law. 11.5. In response to this, ld DR heavily relied on order of A.O and urged to sustain addition on both pages 43 and 45 of SSG/45. 11.6. We have heard rival submissions and perused materials available on record including paper book of assessee submitted in this regard. As regards page 43 of seized document, since assessee has not disputed addition and has only requested for set off in cash flow we direct accordingly for reason mentioned earlier in this order. 11.6.1. As regards page 48 of seized document, we find that factually there is no change in shareholding of impugned companies i.e Adamaya Nirman, Shree Bishnu Nirman, Shree Bishnu Priya Plaza, Shree Gayatri Plaza and Shree Kartic Plaza and hence even if it is assumed that contents of page 48 are true, then also very basis being transfer of such companies having not taken place and hence entire argument of ld AO fails. However, in facts and circumstances, we do not find merit in ld AO s contention since transfer of company itself not having taken place and hence entire addition of Rs. 5,00,00,000/- fails. As result, we hold as follows: Asst year Appeal No. Ground Result Nos. 2007-08 146/K/12 8 Dismissed 35/K/12 10 Dismissed 65 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 2008-09 36/K/12 10 Dismissed 12. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SSG / 48 A.Y 2008-09 C.O. 147/Kol/2012 Ground No.9 - For that in view of facts and circumstances Ld. CIT(A) was wholly unjustified in confirming addition of Rs. 1 ,85,08,949/- on basis of SSG-48 and in view of facts and in circumstances it may kindly be held accordingly. This ground is being taken without prejudice to fact of AO bad been directed to delete addition on basis of rotation statement. IT(SS) 36/Kol/2012 Ground No. 11 - CIT(A) has erred in directing A.O. to consider unexplained expenditure of Rs. 1,85,08,949/- against un accounted cash receipt of Rs. 7,40,90,000/- in A.Y.2006-07, addition was made on basis of seized document SSG/48. Ground No. 12 Ld. CIT(A) has erred in deleting addition of Rs. of Rs. 5,91,83,392/- made on basis of page No. 1 and 21 of seized document SSG/48. A.Y 2009-10 C.O. 148/Kol/2012 Ground No.12 - For that in view of facts and circumstances Ld. ClT(A) was wholly unjustified in confirming addition of Rs.2,57,984/- on basis of SSG-48 and in view of facts and in circumstances it may kindly be held accordingly. This ground is being taken without prejudice to fact of AO had been directed to delete addition on basis of rotation statement. IT(SS) 37/Kol/2012 Ground No.9 Ld. CIT(A) has erred in directing A.O. to consider unepxlianed expenditure of Rs. 2,57,984/- made on basis of seized document SSG / 45 against unaccounted cash receipt of assessee. 12.1. brief facts of this issue are that ld AO found that pages 1 and 21 of seized document SSG/48 contain detail of unexplained expenses of Rs. 1,85,08,949/- & Rs.2,57,984/- which had been admitted by assessee, and, was also included in statement of cash flow. ld AO thus made addition of Rs. 1,85,08,949/- & Rs.2,57,984/- 66 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla as undisclosed expenses in Asst Years 2008-09 and 2009-10 on basis of pages 1 and 21 of seized document marked SSG/48. 12.2. ld AO has mentioned in assessment order that page 7 of seized documents SSG/48 contained working of profit on sale of land held in name of companies. ld AO noted that profit was worked out at Rs.5,91,83,392/-, assessee s share being Rs. 2,07,14,187/-. ld AO further noted that no details were filed about other persons and also, no material was produced to show that profit was recorded by such other persons in their regular books of account. ld AO then added entire profit of Rs. 5,91,83,392/- in hands of assessee in A.Y 2008-09. order of ld AO is reproduced as under :- Page 1 of SSG/48 contains statement of account as on 10.9.2008. assessee in his explanation vide Annexure S [S2 & S3] through Cash flow statement of undisclosed transactions being Annexure X of letter dated 11.11.2010 and vide Annexure U being break-up of undisclosed income admitted Rs. 1,85,08,949/- as undisclosed expenditure of A.Y 2009-10. For remaining account, assessee explained it to be part of regular books of various companies mentioned therein. assessee produced bank statement of various companies, including their audited final accounts and copy of IT returns, cash flow statements. It was submitted that cash for land purchases were done by withdrawals of cash from bank itself and wherever assessee could not link cash expenditures with bank withdrawals, necessary disclosures have been made. SSG/48, page 1 is also account given by broker for land purchased by our Clients at different locations. right side shows amount received by broker and left side shows amount expended by broker and bottom side below tabular firm represents amount due to be paid by our Clients against land purchase and amount expended by broker. receipt side inter-alia shows Cash received by broker of Rs.6,91,20,440/-. This figure has been reconciled from account of various companies and as evident from workings of Annexure S2 of letter dt. 11.11.2010, sum of Rs. 5,87,30,000/- was withdrawn from Bank account of four companies on whose name lands was acquired, as mentioned in left side of seized documents. sum of Rs. 1,03,90,440/- could not be backed by Bank withdrawals and treated as Undisclosed . Besides this, this page contains other receipts by broker of Rs.81,18,509/- which could not be reconciled with regular books and hence same was also offered as undisclosed . As such sum of Rs. 1,85,08,949/- was treated as undisclosed on basis of receipts side of SSG/48, page 1. left side of this page shows land value and other expenses incurred by broker 67 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla which was reconciled with books. sum of Rs. 86,95,799/- could not be reconciled. bottom side (showing expenses incurred by broker) below tabular form was also reconciled with books and sum of Rs.33,58,229/-could not be reconciled and hence same was treated as undisclosed . Thus broker accounts shows undisclosed payments of Rs. 1,85,08,949/- which was more than undisclosed expenditure of Rs.1,20,54,028/- made by him. As such sum of Rs. 1,85,08,949/- has been treated as undisclosed expenditure in working of undisclosed income filed vide letter dt. 11.11.2010. Page 21 of SSG/48 contains account with Sanat. In this respect, assessee admitted undisclosed expenses of Rs.2,57,984/- for A.Y 2009-10. Pages 7, 8 and 9 contain detail of purchase and sale of land and distribution of profit on sale of land relating to project at Chota Chandipur (recorded in names of M/s Ankit Plantations Dewar Exports). In submission assessee claimed writing in these pages as estimates/ rough working except as per pages 8 & 9 which are as per regular books. These are other papers where mention of Project at Chota Chandipur Projects has been found. Further, total amount of expenses of Rs. 9,70,93,817/- appearing page 9 of SSG/46 as claimed by assessee as per regular books is also noticed in working as per page 13 of SSG/48 where it is recorded as purchase value 1642.79 Cottah-9,70,938.17 ( OOtwo zero suppression). Total profit of Rs. 5,91,833.92/- (including assessee s share of Rs. 2,07,14,187/-) as recorded after OO two zero suppression is actually Rs. 5,91,83,392/- and treated as undisclosed income for financial year 2007-08 relevant to A.Y 2008-09, in hands of assessee himself since he could not furnish details regarding other persons and whether transactions were recorded in their regular books. [Undisclosed income for A.Y 2008-09 Rs. 5,91,83,092/-] [Undisclosed expenditure for A.Y 2008-09 Rs.1,85,08,949/-] [Undisclosed expenditure for A.Y 2008-09 Rs.2,57,984/-] 12.3. ld CITA observed as follows:- I have perused assessment order and considered submissions of appellant, and also, material on record. AO has mentioned in assessment order that page 1 and 21 of seized documents SSG/48 contain detail of undisclosed expenses of Rs. 1,85,08,949/- and Rs. 2,57,984/- which was admitted by appellant as undisclosed expenses in A.Y 2008-09 and 2009-10, and, was also included in statement of cash flow. I uphold order of AO that expenses of Rs.1,85,08,949/- and Rs.2,57,984/- was to be considered in case of appellant as undisclosed expenses. However, as undisclosed expenses are to be considered against undisclosed income, AO is directed to treat undisclosed expenses of Rs. 1,85,08,949/- and Rs. Rs.2,57,984/- as part of cash flow statement and then consider net of expenses, if any, for purposes of addition. AO has also made addition of Rs.5,91,83,392/- on account of profit made on alleged sale of land held by companies Ankit Plantation, Kerf Construction and 68 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla Dewan Exports on basis of page 7, 8 and 9 of seized documents SSG/48. It was explained that page 8 and 9 contain detail of investment made in land by said-companies which is duly recorded in their books of account: and, which has also been acknowledged by AO in assessment order. It was contended that page 7 contained estimates or rough working and there was no actual sale of land by companies as alleged by AO. AO has mentioned in assessment order that no detail of other persons was filed. But then, name of companies was available on seized document. AO could have examined those companies to ascertain facts, and also, to verify nature of entries as made in seized document. I find from assessment order that it was explained before AO at assessment stage that page 70 of seized document SSG/48 only contained' estimates or rough workings; and, that there was no actual sale of land. In course of appellate proceedings, I had required appellant to produce copy of profit & loss account and balance sheet of concerned companies for year ending 31.3.2008, 31.3.2009 and 31.3.2010. appellant has produced said documents along with Annual Returns as filed before ROC. I find that land holding of companies as shown in balance sheet remained same or had nominally increased. I also find that no profit or loss on account of sale of land was credited or debited in profit & loss account of companies. appellant has brought sufficient material on record in support of his contention that actually there was no sale of land by companies, and that seized document merely contained estimates or rough workings. On other hand, AO has brought no material on record to show that any sale of land was actually made. No transfer deed was found in search nor was nay brought on record by AO in course of assessment proceedings. AO has not identified piece of land that was sold by companies. AO did not examine companies to ascertain facts or to verify nature of entries as made in seized document. AO has blindly interpreted seized document without ascertaining facts or verifying nature of entries in seized document. Even in course of remand proceedings, AO has failed to bring positive material on record to substantiate his finding that profit was made on sale of land held by companies. AO has simply presumed that there was sale of land resulting in profit of Rs. 5,91,83,392/-. decision of AO is not based on proper findings. explanation submitted by appellant has been summarily rejected by AO more on presumption than in factual ground. There is positive material on record in form of profit & loss account and balance sheet of concerned companies for year ending 31.3.2008, 31.3.2009 and 31.3.2010 to show that no sale of land was actually made by companies. All three companies mentioned in seized document still continue to hold such land as per their respective audited accounts and so entire presumption of sale of land by AO carries no force. conclusion of AO that profit was made on sale of land is contrary to evidence on record. In this factual background, I am of opinion that there is no material or evidence whatsoever to substantiate finding of AO. addition of Rs. 5,91,83,392/- as made by AO is directed to be deleted. 12.4. ld AR submitted that addition is as follows : a) Page 1 SSG/48 Rs 1,85,08,949/- b) Pages 7, 8 & 9 Rs.5,91,83,392/- 69 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 12.4.1. He submitted hat addition on basis of page 1 Rs. 1,85,08,949/- is merely on confessional statement and as such addition may kindly be not sustainable. 12.4.2. He submitted that Rs. 5,91,83,392/- has been added on basis of page 7, 8 & 9 of SSG/48. As far as page 9 is concerned, it represents land owned by different companies, name of which are duly appearing therein, and such amount being duly reflected in respective companies books of account, and hence no adverse inference can be drawn in that regard. Similarly, page 8 simply shows certain balance sheet items of those companies and in that regard also, no adverse inference can be drawn. As regards pg 7 kindly appreciate that it does not contain anywhere name of assessee except word SP and simply on such basis it cannot be presumed that same belongs/ pertains to assessee. Further said document was merely planning document and deal not having materialized such companies continue to hold such land in their books and hence no adverse inference can be drawn in that regard as well. Without prejudice to earlier argument, even if it is presumed that SP means assessee , then also only 35% of 59183392 could be treated in hands of assessee. However ld AO not having corroborated in any manner link of assessee with such document, presumption drawn is bad in law. 12.4.3. He drew our attention to pages 1970, 2021, 2063 of paper book No.12 to substantiate fact that no change in shareholding of such companies have taken place and hence entire contention of ld AO has no substance. 12.4.4. As regards ld CITA s action in allowing set off of expenses so incurred by assessee and / or its associates, it was submitted by ld AR that there is no dispute in fact that assessee had received cash on account of transaction with Fort to tune of Rs. 7,40,90,000/- and also other receipts which was available with assessee and expenses were out of such sums only and hence ld CITA was fully justified in allowing such set off. ld AR also submitted that on perusal of assessment order itself , it can be observed that ld AO himself has allowed such set off and now revenue is disputing such action which amounts to disputing its own earlier action and which is not permissible as per law. 70 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 12.5. In response to this, ld DR relied heavily on order of AO and urged to sustain addition arising out of page 43 and page 45 of SSG/45. 12.6. We have heard rival submissions and perused materials available on record including paper book submitted by assessee in this regard. As regards page 43 of seized document , since ld AR stated that same is not pressed, said addition of Rs. 2,57,984/- is sustained and ground raised in CO of assessee is dismissed as not pressed. Hence we do not find any infirmity in order of ld CITA in this regard. 12.6.1. As regards page 48, we find that factually there is no change in shareholding of impugned companies i.e. Kerf Constructions, Ankit Plantation and Dewan Exports and hence even if we presume for time being that contents in pages 7, 8 & 9 are true, and then also, very basis of ld AO s addition has lost relevance and addition cannot be sustained on such account. However, we also find that ld AO has filed to corroborate transaction in such respect nor has brought any evidence and has merely presumed of such transactions entire addition is bad in law. In facts of matter we do not find any merit in ld AO s contention and hence entire addition of Rs. 5,91,83,392/- cannot be sustained and such ground of revenue fails. 12.6.2. As regards revenue s ground in treating Rs. 1,85,08,949/- out of available cash, we find merit in fact that that ld AO himself has allowed such set off in assessment order , so revenue cannot be allowed to change its stand now. Even otherwise, revenue is not in possession of any evidence nor it has furnished any such fact on record that sums expended were other than out of sum earned / received as cash by assessee. Hence, we concur with order of ld CITA in allowing sums as part of cash flow and as such revenue s ground fails on such account. As result, we hold as follows: Asst year Appeal No. Ground Result Nos. 2008-09 36/K/12 11 & 12 Dismissed 71 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla 147/K/12 9 Dismissed 2009-10 37/K/12 9 Dismissed 148/K/12 12 Dismissed 13. ADDITION TOWARDS CASH, JEWELLERY & UNDISCLOSED BANK ACCOUNTS A.Y 2006-07 IT(SS) 34/Kol/ 2012 Ground No. 6 - Ld. CIT(A) is erred in directing A.O. to consider undisclosed amt. of 65,300/- found in bank a/c of assesse's wife against undisclosed cash receipt of assesse. A.Y 2006-07 C.O. 145/Kol/2012 Ground No.4 - For that in view of facts and circumstances Ld. ClT(A) erred in confirming action of AO in treating Rs. 65,300/- being sum credited in bank account of wife of appellant as undisclosed investment of appellant and such action of Ld. CIT(A) in confirming action of AO is without appreciating fact that said bank account stood in name of wife of appellant and if any addition were to be made such addition have been made in hands of wife of appellant only. However, Ld. CIT(A) without appreciating fact sustained addition so made and such action of Ld. CIT(A) is liable to be quashed / cancelled / set aside. A.Y 2007-08 CO. 146/Kol/2012 Ground No. 4 - For that in view of facts and circumstances Ld. ClT(A) erred in confirming action of AO in treating Rs. 85,863/- being sum credited in bank account of wife of appellant as undisclosed investment of appellant and such action of Ld. CIT(A) in confirming action of AO is without appreciating fact that said bank account stood in name of wife of appellant and if any addition were to be made such addition have been made in hands of wife of appellant only. However, Ld. CIT(A) without appreciating fact sustained addition so made and such action of Ld. CIT(A) is liable to be quashed / cancelled / set aside. IT(SS) 35/Kol/2012 Ground No. 6 - Ld. CIT(A) is erred in directing A.O. to consider undisclosed amt. of 67,411/- (Correct amount 85,863/-) found in bank a/c of assesse's wife against undisclosed cash receipt of assesse. A.Y 2008-09 72 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla C.O. 147/Kol/2012 Ground No.4 - For that in view of facts and circumstances Ld. ClT(A) erred in confirming action of AO in treating Rs. 69,882/- being sum credited in bank account of wife of appellant as undisclosed investment of appellant and such action of Ld. CIT(A) in confirming action of AO is without appreciating fact that said bank account stood in name of wife of appellant and if any addition were to be made such addition have been made in hands of wife of appellant only. However, Ld. CIT(A) without appreciating fact sustained addition so made and such action of Ld. CIT(A) is liable to be quashed / cancelled / set aside. IT(SS) 36/Kol/2012 Ground No.1 - Ld. CIT(A) is erred in directing A.O. to consider unexplained cash deposit of Rs. 69,882/- in Bank account of wife of assessee against unaccounted cash receipt of assessee. A.Y 2009-10 C.O. 148/Kol/2012 Ground No. 5 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs. 3,74.170/- as undisclosed assets of appellant, although such sum was seized from premises which does not belong to appellant and as such action of Ld. CIT(A) in confirming action of AO is completely bad & illegal and in view of facts and in circumstances such action of Ld. CIT(A) is liable to be quashed/ cancelled/ set aside. This ground is without prejudice to fact that appellant has shown same as application of income offered by it and hence it may kindly be considered accordingly. Ground No.6 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming action of AO in treating Rs. 67,411/- being sum credited in bank account of wife of appellant as undisclosed investment of appellant and such action of Ld. CJT(A) in confirming action of AO is without appreciating fact that said bank account stood in name of wife of appellant and if any addition were to be made such addition have been made in hands of wife of appellant only. However, Ld. CIT(A) without appreciating fact sustained addition so made and such action of Ld. CIT(A) is liable to be quashed /cancelled/set aside. This ground without prejudice to fact that appellant has shown same as application of income offered by it and hence it may be kindly be considered accordingly. Ground No.7 - For that in view of facts and circumstances Ld. CIT(A) erred in confirming lhe action of AO in treating Rs.17,56,785/- as undisclosed investment of appellant without appreciating fact that such jewellery had not been found either in possession of appellant or from premises of appellant hence such action of AO is without appreciating fact that such jewellery belonged to other persons and hence action of Ld. ClT(A) in confirming action of AO is liable to be quashed/ cancelled/ set 73 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla aside. This ground is without prejudice 10 fact that appellant has shown same as application of income offered by it and hence it may kindly be considered accordingly. IT(SS) 37/Kol/2012 Ground No. 1 Ld. CIT(A) has erred in deleting addition of Rs. 3,74,170/- unaccounted cash seized from premises of assessee. Ground No. 2 - Ld. CIT(A) has erred in deleting addition of Rs. 17,56,785/- made against undisclosed jewellery by stating that these are covered by unaccounted cash receipt of Rs. 7,96,45,460/- in A.Y. 2006-07 & 2007-08. A.Y 2008-09 IT(SS) 36/Kol/2012 Ground No. 9 - Ld. CIT(A) erred in directing A.O. to consider unexplained expenditure of Rs. 45,456/- accounted cash receipt of assessee. 13.1. ld AR submitted that as regards ld CITA s action in allowing set off of amount of cash, jewellery and undisclosed bank account being out of available cash, it was submitted by ld AR that there is no dispute in fact that assessee had received cash on account of transaction with Fort to tune of Rs. 7,40,90,000/- and also other receipts which was available with assessee and as such cash found or jewellery and / or undisclosed bank account were out of such sums only and hence ld CITA was fully justified in allowing such set off. He also submitted that on perusal of assessment order itself, it can be observed that ld AO himself has allowed such set off and now revenue is disputing such action which amounts to disputing its own earlier action and which is not permissible as per law. On merits, ld AR did not submit anything in particular. 13.2. In response to this, ld DR objected to such contention of ld AR and requested for affirming addition. 13.3. We have heard rival submissions and perused materials available on record including paper book of assessee submitted in this regard. As regards assessee s ground on merits, we do not find any substance nor ld AR was able to point out any mistake in order of ld AO in that regard. Hence assessee s ground in respective years in that regard fails. 74 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla As regards revenue s ground in treating Rs. 85,863/-, Rs.69,882/-, Rs.3,74,170/-, Rs.67,411/- & Rs.17,56,785/- out of available cash , we find merit in fact that that ld AO himself has allowed such set off in assessment order so revenue cannot be allowed to change its stand now. Even otherwise, revenue is not in possession of any evidence nor it has furnished any such fact on record that sums expended were other than out of sum earned / received as cash by assessee. Hence, we concur with order of ld CITA in allowing sums as part of cash flow and as such revenue s grounds in respective years fails on such account. As result, we hold as follows: Asst year Appeal No. Ground Result Nos. 2006-07 34/K/12 6 Dismissed 145/K/12 4 Dismissed 2007-08 35/K/12 6 Dismissed 146/K/12 4 Dismissed 2008-09 36/K/12 1 Dismissed 147/K/12 4 Dismissed 2009-10 37/K/12 1&2 Dismissed 148/K/12 5, 6 & 7 Dismissed 14. other grounds raised in various years are general in nature and does not require any adjudication. 15. In result, appeals of revenue as well as assessee and cross objections of assessee are disposed off as directed above. Order pronounced in open court on 05.10.2016 Sd/- Sd/- (K. Narsimha Chary) (M. Balaganesh) Judicial Member Accountant Member Dated : 5th October, 2016 Jd.(Sr.P.S.) 75 ITA No. 1418,1411,1419,1412,857/Kol/2012 & IT(SS)A No.34-37/Kol/2012 & CO Nos. 145-148/Kol/2012 Surya Prakash Bagla Copy of order forwarded to: 1. Assessee: Shri Surya Prakash Bagla, C/o, Salarpuria Jajodia & Co., 7, C. R. Avenue, Kolkata0700 072. 2 Revenue DCIT, Central Circle-VII, Kolkata 3. CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata /True Copy, By order, Asstt. Registrar. Deputy Commissioner of Income-tax, Central Circle-VII, Kolkata v. Surya Prakash Bagla