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2021 (2) TMI 889 - AT - Income TaxValidity of assessment U/s. 153C - assumption of jurisdiction u/s. 153C - Whether no material belonging to the assessee was found? - whether the document i.e. the sale deed, which mentions the assessee as attorney holders of sellers; can be said to belong to the assessee? - HELD THAT - In the instant case, assessee was the attorney holder of the seller. The sale deed was found during the course of search at the premises of the buyer. The sale deed, at best can be said to relate to or refer to the assessee, but it cannot be said to belong to the seller or to the attorney holder. Before us Ld. CIT(DR) could not place any judgment in its favour against this judgment of Hon'ble Delhi High Court in the case of Pepsico India Holdings P Ltd. Vs Asst CIT 2014 (8) TMI 898 - DELHI HIGH COURT - Respectfully following this judgment, we therefore hold that the proceedings u/s.153C are bad in law and therefore the assessments so made deserves to be quashed. This ground of the assessee s appeal is allowed. Undisclosed on money payment - As on 27.11.2010 an amount of ₹ 10,00,000 was paid as per the agreement, and an amount of ₹ 8,00,000 was deposited in the bank account of the sellers. Similarly, upto 10.12.2010, ₹ 40,00,000 was to be paid and ₹ 37,00,000 was deposited nearing to that date. Further, upto 10.04.2011 ₹ 50,00,000 was to be paid as per the agreement; and ₹ 29,99,000 was deposited on 31.03.2011 and ₹ 24,70,000 was deposited between 15 to 18 April 2011. Similarly, upto 10.08.2011 ₹ 4,03,00,000 was to be paid; and between Aug. and Sept. 2011, all payments were done and sale deed was also registered in the favour of M/s. Agrawal Buildcon. Considering the entirety of the facts, so far as the payments made, the nexus between amount received from M/s. Agrawal Buildcon and payment to Smt. Rekha Bai and others can be established. Since it is proved that the consideration of ₹ 4,03,00,000/- which included both the accounted and unaccounted consideration has been paid by M/s Agrawal Buildcon for the purchase of land in question from the sellers namely Smt. Rekha Bai and others, revenue authorities are free to carry out necessary exercise/ verification in the case of M/s Agrawal Buildcon with regard to the balance purchase consideration at Rs..4,03,00,000/-. However, so far as the cash deposits in the account of Smt. Rekha Bai and others in April 2011, to the tune of ₹ 24,70,000 no nexus can be established in respect to amount received from M/s. Agrawal Buildcon. Since there in no direct evidence as to when the amount was actually paid, considering the surrounding circumstances based on agreement and bank accounts of the sellers, we hold that during the current A.Y. 2012-13 the source of payment of ₹ 24,70,000 to Smt. Rekha Bai and others could not be established and therefore ought to be confirmed. Since the share of the assessee Pradeep Sharma was 40% in the land deal, an amount of ₹ 9,88,000 is to be confirmed in the hands of Pradeep Sharma for A.Y. 2012-13. Balance addition of ₹ 1,02,39,401 (₹ 1,12,27,401 ₹ 9,88,000) is hereby deleted.
Issues Involved:
1. Validity of proceedings under Section 153C read with Section 143(3) of the Income Tax Act. 2. Disallowance of deduction under Section 80IB(10). 3. Addition on account of undisclosed on-money payment. 4. Addition on account of commission on sale of land. 5. Levy of penalty under Section 271(1)(c). Issue-wise Analysis: 1. Validity of Proceedings under Section 153C: The core issue was whether the documents seized during the search belonged to the assessee, thus justifying the initiation of proceedings under Section 153C. The Tribunal observed that the sale deed, which was the basis of the proceedings, was found during a search at the premises of a third party and merely related to the assessee. Citing the Delhi High Court's ruling in Pepsico India Holdings P Ltd. vs. ACIT, the Tribunal held that the document did not "belong" to the assessee but rather "related to" them. Consequently, the proceedings under Section 153C were deemed invalid, and the assessments were quashed. 2. Disallowance of Deduction under Section 80IB(10): The Tribunal addressed the disallowance of deductions claimed under Section 80IB(10) due to the non-issuance of a completion certificate within the stipulated time. Referring to the jurisdictional High Court's ruling in Pr. CIT vs. Surabhi Homes P Ltd., it was held that mere non-satisfaction of a condition for deduction does not amount to furnishing incorrect particulars or concealment of income. Thus, the penalty under Section 271(1)(c) for these years was deleted. 3. Addition on Account of Undisclosed On-Money Payment: The Tribunal examined the addition based on the alleged on-money payment for land purchase. The assessee contended that the on-money was paid out of the cash received from the subsequent sale of the land to M/s. Agrawal Buildcon. The Tribunal analyzed the payment dates and the bank statements of the sellers, establishing a nexus between the amounts received from M/s. Agrawal Buildcon and the payments made to the sellers. However, it could not establish the source of ?24,70,000 paid in April 2011. Consequently, the addition was partly confirmed to the extent of ?9,88,000, being 40% of ?24,70,000, in the hands of Pradeep Sharma and Pradeep Hirani for A.Y. 2012-13. 4. Addition on Account of Commission on Sale of Land: The Tribunal noted that the assessee had already offered additional commission income and did not press this ground. Therefore, this ground was dismissed as not pressed. 5. Levy of Penalty under Section 271(1)(c): The Tribunal dealt with the penalty levied for various additions: - For A.Y. 2006-07 to 2010-11, penalties related to disallowance under Section 80IB(10) were deleted, as the disallowance was due to the non-issuance of a completion certificate and not due to any concealment or furnishing of inaccurate particulars. - For A.Y. 2011-12, penalties were quashed as the assessment itself was quashed. - For A.Y. 2012-13, penalties were sustained only to the extent of the addition of ?9,88,000, as the Tribunal had partly confirmed this addition. Conclusion: The Tribunal allowed the appeals in respect of the validity of Section 153C proceedings and quashed the assessments for A.Y. 2011-12. It partly allowed the appeals for A.Y. 2012-13, confirming only a portion of the additions. Penalty appeals were allowed for A.Y. 2006-07 to 2011-12 and partly allowed for A.Y. 2012-13, sustaining penalties only on the confirmed additions.
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