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2020 (7) TMI 657 - AT - Income TaxValidity of notice issued u/s 153C - whether the document found from the premises of the 3rd party belongs to the assessee as provided under section 153C prior to the amendment therein which is effective from 1stJune 2015? - Document found from the premises of the 3rd party - HELD THAT - It is transpired that the document found during the search at the place of searched party must belong to the assessee for initiating the proceedings under section 153C of the Act. The word belong used in section 153C requires that there has to be control and possession of the assessee (person other than searched person) on such document even though the assessee is not legal owner. As such the document found in the case on hand from the premises of the 3rd party, the assessee had no control of whatsoever on such document. Therefore in our considered view such document cannot be termed as belonging to the assessee. Once a document does not belong to the assessee as mandated under the provisions of section 153C of the Act, prior to the amendment, does not authorize the AO to initiate the proceedings against the assessee - See PEPSICO INDIA HOLDINGS PRIVATE LIMITED 2014 (8) TMI 898 - DELHI HIGH COURT . There cannot be any question of initiating the proceedings under section 153C of the Act, until and unless the documents found during the course of search from the premises of the 3rd party belongs to the assessee. Whether the amendment brought under the provisions of section 153C where the word belong was replaced with the word pertain is applicable for the year under consideration? - Provisions of section 153C as applicable on the date of search will be applied to the proceedings initiated therein. Thus there remains no ambiguity to the fact that the provisions of section 153C of the Act prior to the amendment therein, will be applicable in the case on hand which requires the AO to arrive at a satisfaction that the documents found from the premises of the 3rd party in the course of search belongs to the assessee. We have already explained the meaning of the word belongs in the preceding paragraph. In view of the above, we are conscious to the fact that the seized material found from the premises of the 3rd party in the course of search does not belong to the assessee. Thus in our considered view the proceedings under section 153C of the Act, cannot be initiated. Addition on account on-money paid against purchase of agricultural land - HELD THAT - There was no mention/reference of survey No. 1242 in the excel sheet found during the course of search, therefore we are of the view that there cannot be any addition on account of on money. It is because there was no iota of evidence available with the AO suggesting that there was any on money paid by the assessee. Regarding the land bearing survey No. 1223, we note that this impugned survey number was very much mentioned in the excel sheet found from the 3rd party as discussed above. However that information cannot be the basis of making any addition to the total income of the assessee. It is because it does not suggest that any on money has been paid by the assessee. Furthermore it is a piece of information found from the 3rd party which has no dealing of whatsoever with the assessee. Moreover, no fact has been brought on record by the AO except that the relatives of the assessee has purchased some flats property constructed by ADPL which is not sufficient enough to draw any inference against the assessee based on such excel sheet. Thus in the absence of any documentary evidence about the payment of on money, we hold that there cannot be any addition to the total income of the assessee. Case followed JAWAHARBHAI ATMARAM HATHIWALA VERSUS INCOME-TAX OFFICER 2009 (10) TMI 900 - ITAT AHMEDABAD .
Issues Involved:
1. Validity of notice issued under section 153C of the Income Tax Act, 1961. 2. Deletion of additions made on account of on-money paid for the purchase of agricultural land. 3. Deletion of additions made on account of unexplained expenditure. 4. Reliance on affidavits of sellers submitted by the assessee versus original statements given by sellers. 5. Discrepancies in the statements of the farmers. Issue-wise Detailed Analysis: 1. Validity of Notice Issued Under Section 153C: The primary issue raised by the assessees in their cross objections was the validity of the notice issued under section 153C of the Income Tax Act, 1961. The assessees argued that the documents found during the search did not belong to them and thus could not justify the initiation of proceedings under section 153C. The Tribunal noted several key points: - The documents were found from the premises of a third party (ADPL) and did not have any direct or indirect relationship with the assessees. - There was no specific detail related to the assessees in the seized documents, such as names, addresses, phone numbers, PAN, or banking details. - The documents did not bear the signatures of the assessees or the sellers of the impugned survey numbers. - The date on the seized documents was after the dates on which the assessees had purchased the lands in question. The Tribunal concluded that the documents did not "belong" to the assessees as required under section 153C prior to its amendment effective from 1st June 2015. Consequently, the initiation of proceedings under section 153C was held to be invalid, and the cross objections filed by the assessees were allowed. 2. Deletion of Additions Made on Account of On-Money Paid for the Purchase of Agricultural Land: The Revenue challenged the deletion of additions made by the Assessing Officer (AO) on account of on-money paid for the purchase of agricultural land. The AO had based the additions on excel sheets found during the search at ADPL, which allegedly indicated higher amounts paid for the lands than recorded in the sale deeds. However, the Tribunal noted: - The excel sheets were found from the premises of ADPL, a third party with no direct or indirect connection to the assessees. - There was no corroborative evidence to suggest that the assessees had paid on-money. - The sellers of the lands had retracted their statements about receiving on-money during cross-examination. The Tribunal upheld the CIT(A)'s decision to delete the additions, emphasizing the lack of concrete evidence to support the AO's claims. 3. Deletion of Additions Made on Account of Unexplained Expenditure: Similar to the issue of on-money, the Tribunal found no substantial evidence to support the AO's additions on account of unexplained expenditure. The CIT(A) had deleted these additions, and the Tribunal saw no reason to interfere with this decision. 4. Reliance on Affidavits of Sellers Submitted by the Assessee Versus Original Statements Given by Sellers: The Revenue argued that the CIT(A) erred by relying on affidavits of the sellers submitted by the assessees at a later date, instead of the original statements given by the sellers during the search. The Tribunal, however, noted that the sellers had retracted their statements during cross-examination, and there was no other evidence to substantiate the AO's claims. Thus, the reliance on the affidavits was deemed appropriate. 5. Discrepancies in the Statements of the Farmers: The AO had pointed out inconsistencies in the statements of the farmers (sellers of the land). However, the Tribunal found that these discrepancies did not provide a sufficient basis for making additions to the assessees' income, especially in the absence of direct evidence linking the assessees to the alleged on-money payments. Conclusion: The Tribunal allowed the cross objections filed by the assessees, holding that the initiation of proceedings under section 153C was invalid. Consequently, the appeals filed by the Revenue were dismissed as infructuous. The Tribunal emphasized the importance of concrete evidence and the correct interpretation of legal provisions in tax assessments.
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