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2019 (7) TMI 930 - AT - Income TaxAddition on account of receipt of cash payments - Search and seizure action u/s 132 in Vipul group - assessee company are 50 % partners in the project with Vipul group - from residence of Shri Moti S Masand, director of M/s Vipul Ltd, several documents were seized which are MIS receipts of collection of customers money for different projects of Vipul - documents show cash receipts of INR 40.56 crore - similar addition was also made in M/s Vipul Ltd - HELD THAT - We found that on the same seized material the addition has been deleted by the coordinate bench in case of the Vipul Ltd who is also the 50% owner of the various projects. The facts and circumstances of the case of the addition in the hands of the assessee are identical and are on the same seized material and the statement of the party. The learned departmental representative could not controvert the above fact and could not show us any reason to deviate from the decision of the coordinate bench. In view of this, respectfully following the decision of the coordinate bench, we direct the learned AO to delete the above addition of ₹ 43.76 crore in the hands of the assessee based on the seized paper found from Mr. Moti S Masand.- Accordingly, ground numbers 1 3 of the appeal of the learned AO are dismissed. Assessment u/s 153C - no documents and material seized during the various searches could be said to be belonging to the assessee - HELD THAT - The learned DR could not show us from the documents seized from Shri Moti Masand that there is any reference of the assessee in those documents. Therefore, it is apparent that they do not belong to the assessee. As such we have confirmed the order of the learned CIT A wherein the addition of ₹ 43.76 crores have been deleted following the order of the coordinate bench in case of Vipul Ltd, Even Otherwise those documents does not belong to the assessee. Thus, no addition can be made in the hands of the assessee based on these documents. The assumption of jurisdiction by the ld AO u/s 153C is also devoid of merit. Recording of satisfaction note by the AO in the file of the person searched as well as in the file of the person covered u/s 153C - HELD THAT - On careful consideration of the rival arguments it is apparent that the issue is squarely covered against the assessee in view of the decision of the honourable Delhi High Court in case of Ganapathi Fincap services private limited 2017 (5) TMI 1425 - DELHI HIGH COURT Addition u/s 69B - undisclosed payments for the purchase of the land at from various person - HELD THAT - Apparently in this case the documents are based on which the addition has been made are not seized from the possession of the appellant but are seized from Messer SVS Promart private limited being a property dealer. It neither has the reference of the appellant or any of its employees. Furthermore the document seized shows the land at Zirakpur and the land owned by the assessee is at Raj para therefore there is a locational difference also between the documents seized and the actual facts. The learned CIT A further noted that the documents have been seized from a third-party and in spite of the request made by the assessee for examination of that party, no such opportunity was given to the assessee. Further, the learned assessing officer also did not examine the sellers of the land to find out whether there is any consideration received by them. The statement of the estate broker Shri Vipin, is recorded at the back of the assessee and never confronted to the assessee to rebut the same. In fact, actually the addition made by the learned assessing officer is not supported by any material credible evidence. Therefore, the addition was deleted. Addition of interest paid on the bank overdraft utilized for non business purposes - HELD THAT - In the present case, the interest free funds available with the assessee far exceeded the alleged non-interest-bearing advances given by the assessee to other parties. In view of this the presumption arises in favour of the assessee that the amount of interest free advances given are out of non-interest-bearing funds available with the assessee which have far exceeded the amount of non-interest-bearing advances. The learned CIT A deleted the above disallowance relying upon the decision of the honourable Bombay High Court in RELIANCE UTILITIES POWER LTD. 2009 (1) TMI 4 - BOMBAY HIGH COURT - The learned departmental representative could not point out any infirmity in the order of the learned CIT A. In view of this we also do not find any infirmity in the order of the learned CIT A and confirm his order deleting the addition because of interest paid to the banks. Addition based on substantial basis - assessee has already disclosed INR 31.50 crores based on seized material - addition that has been made by the learned assessing officer of INR 11.21 crores is less than INR 3 1.50 crores - HELD THAT - The document seized from Mr. Saraf placed at page number 41 42 of the paper book does not have any reference of the appellant company, the name of the assessee company was not at all mentioned on those documents. Therefore, the learned CIT A has also held that these documents do not belong to the assessee company. Further, with respect to RTGS mentioned, no correlation or corroboration was made to show that it belongs to the assessee company. The learned departmental representative could not show us that how the seized documents belongs to the assessee. On reading the assessment order itself, the learned assessing officer has also not stated that how these documents belong to the assessee. The learned departmental representative also could not controvert the infirmity in the order of the learned CIT A. In view of above facts, we confirm the order of the learned CIT A , for the reason that the disclosure of INR 31.50 crores subsumed the above addition of INR 11.21 crore , to the extent of INR 9.33 crore set off to Mr. Saraf has not been granted, the seized document does not contain any reference of the appellant company, revenue failed to establish that the documents belong to the assessee. In the result, the ground number 1 of the appeal of the learned AO is dismissed.
Issues Involved:
1. Validity of assessment proceedings under section 153C. 2. Jurisdiction of the assessing officer. 3. Legality of additions based on seized documents. 4. Cross-examination and natural justice principles. 5. Incriminating evidence and its relevance to the assessee. 6. Set-off against disclosed income. Issue-wise Detailed Analysis: 1. Validity of Assessment Proceedings under Section 153C: The assessee challenged the validity of the assessment proceedings initiated under section 153C, arguing that the documents seized during the searches did not "belong to" the assessee. The Tribunal noted that the documents seized from Mr. Moti S. Masand and Mr. Aman Sharma did not mention the assessee's name. The Tribunal relied on the Delhi High Court's decision, which mandates that the documents should belong to the assessee for section 153C to apply. Consequently, the Tribunal held that the assumption of jurisdiction under section 153C was invalid as the documents did not belong to the assessee. 2. Jurisdiction of the Assessing Officer: The assessee contended that the satisfaction note required for initiating proceedings under section 153C was not properly recorded. The Tribunal observed that the satisfaction note did not show any reason why the documents belonged to the assessee. Since the documents did not belong to the assessee, the Tribunal concluded that the jurisdiction assumed by the assessing officer was devoid of merit. 3. Legality of Additions Based on Seized Documents: The assessing officer made substantial additions based on seized documents, alleging undisclosed income. The Tribunal found that the documents seized from Mr. Masand were used by him for his own purposes and did not relate to the assessee. The Tribunal also noted that the seized documents did not mention the assessee's name. Therefore, the Tribunal deleted the additions made by the assessing officer, holding that the documents did not substantiate the alleged undisclosed income. 4. Cross-examination and Natural Justice Principles: The assessee argued that the opportunity for cross-examination was not provided, violating the principles of natural justice. The Tribunal agreed, noting that the statements of Mr. Masand and others were recorded without giving the assessee a chance to cross-examine them. The Tribunal emphasized that the assessing officer should have confronted the assessee with the statements and provided an opportunity for rebuttal. Consequently, the Tribunal held that the additions based on such statements were not sustainable. 5. Incriminating Evidence and Its Relevance to the Assessee: The Tribunal examined whether the seized documents were incriminating and relevant to the assessee. It found that the documents did not contain any reference to the assessee and were not seized from the assessee's premises. The Tribunal emphasized that the documents should have a direct nexus with the assessee's business activities for them to be considered incriminating. Since the documents did not meet this criterion, the Tribunal held that they could not be used to make additions in the assessee's hands. 6. Set-off Against Disclosed Income: The assessee argued that the disclosed income of ?31.50 crores should be set off against the additions made by the assessing officer. The Tribunal noted that the disclosed income subsumed the additions made by the assessing officer. Since there was no other incriminating material found during the search, the Tribunal allowed the set-off, holding that the disclosed income covered the alleged undisclosed income. Conclusion: The Tribunal comprehensively analyzed the issues involved, emphasizing the importance of proper jurisdiction, adherence to natural justice principles, and the relevance of incriminating evidence. It concluded that the assessment proceedings under section 153C were invalid, the additions based on seized documents were not sustainable, and the disclosed income should be set off against the alleged undisclosed income. Consequently, the appeals filed by the revenue were dismissed, and the assessee's appeals were partly allowed.
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