2022 (6) TMI 1476 - AT - Income Tax

Addition u/s 153A - Addition made on the basis of material seized alongwith the statement as recorded during search and also confronted to the assessee - Addition u/s 68 - HELD THAT - There is contradictory approach of the AO in making wrong addition on this account. It is also noteworthy to mention that AO made the addition on the basis of statements of Harpal Yadav who gave his search statement u/s 132(4) in relation to the loose paper found in his premises but no material on this account was found in the possession of the assessee. As per the provisions of Sec. 153C, the material, if any, on the basis of which addition is to be made was not found in the premises of assessee then neither action could be taken under section 153A nor any addition u/s 153A can be made. The addition if any could have been made only after issuing notice under section 153C after recording the satisfaction by the AO of other search persons. In the present case the AO has not assumed any jurisdiction under section 153C rather than made the addition u/s 153A. Thus the assessment as well as addition u/s 153A are wrongly made and liable to be deleted. Further the AO has also made the addition u/s 68 which is also incorrect or wrong in view of above deliberations. Thus in view of the above facts, circumstances and legal position of the case, the addition sustained by the ld. CIT(A) is deleted and grounds of appeal of the assessee are allowed. Long Term Capital Gain - Addition was made on the basis of statement of Sh. Nirmal Kedia who purchased the land from assessee and paid the On-Money to the assessee and statement has been given u/s 132(4) - HELD THAT - The same addition was also made in the hands of M/s Kedia Real Estate LLP on account of On-Money Paid by him to the assessee. On perusal of the record and material before us, it is found that Sh. Nirmal Kedia has retracted from his statements and the assessee has also nowhere admitted receiving any On-Money from M/s Kedia Real Estate LLP and no documents or evidence has been found either in the possession of the assessee or in the possession of M/s Kedia Real Estate LLP except only a statement of Sh. Nirmal Kedia, who had retracted the same later on. To this effect, the ld. CIT(A) and this Bench has deleted the addition in the hands of M/s Kedia Real Estate LLP 2019 (6) TMI 426 - ITAT JAIPUR Thus we concur with the findings of the ld. CIT(A). Thus the appeal of the Revenue is dismissed.

Summary

Issues Involved:
1. Legality of the assessment order and search action.
2. Addition of Rs. 1,17,20,000/- on account of alleged "On Money" paid by the assessee.
3. Invocation of Section 115BBE for charging tax at a higher rate.
4. Charging of interest under Section 234B.
5. Deletion of addition of Rs. 2,44,93,451/- on account of long-term capital gains.

Detailed Analysis:

1. Legality of the Assessment Order and Search Action:
The assessee challenged the assessment order under Section 143(3) read with Section 153A, arguing it was bad in law and lacked jurisdiction. The Tribunal noted that the search and seizure operation was carried out under Section 132, and various documents were found and seized. The assessee contended that the search action and consequent notices were illegal and contrary to the real facts of the case.

2. Addition of Rs. 1,17,20,000/- on Account of Alleged "On Money":
The assessee argued that the addition was based on the statement of a third party, Mr. Harpal Yadav, and documents found at his premises. The assessee retracted his statement through an affidavit and requested cross-examination of Mr. Harpal Yadav, which was denied by the AO. The Tribunal emphasized that no addition can be made solely based on third-party statements without cross-examination, citing the Supreme Court's decision in Andaman Timber Industries vs. CCE. The Tribunal also noted that no incriminating documents were found in the assessee's possession, and the addition was not supported by any corroborative evidence. Consequently, the Tribunal deleted the addition of Rs. 1,17,20,000/-.

3. Invocation of Section 115BBE for Charging Tax at a Higher Rate:
The assessee contended that the AO erred in invoking Section 115BBE without any show cause notice and that the provision was not applicable. The Tribunal did not provide a specific ruling on this issue, as it was consequential to the deletion of the addition of Rs. 1,17,20,000/-.

4. Charging of Interest under Section 234B:
The assessee denied liability for interest under Section 234B, arguing it was contrary to the provisions of law and facts. The Tribunal noted that this issue was consequential and did not require separate adjudication.

5. Deletion of Addition of Rs. 2,44,93,451/- on Account of Long-Term Capital Gains:
The AO made an addition based on the statement of Mr. Nirmal Kedia, who allegedly paid Rs. 5 crore as "On Money" for purchasing land from the assessee. The assessee denied receiving any "On Money" and requested cross-examination of Mr. Kedia, which was denied. The Tribunal noted that no incriminating documents were found in the assessee's possession or at Mr. Kedia's premises. The Tribunal also referred to its previous decision in the case of M/s Kedia Real Estate LLP, where a similar addition was deleted. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 2,44,93,451/-.

Separate Judgments Delivered:
The Tribunal delivered separate judgments for the appeals of the assessee and the revenue. The assessee's appeal was partly allowed, while the revenue's appeals were dismissed.