2023 (2) TMI 1006 - AT - Income Tax

Validity of assessment framed by the AO u/s 153C without issuing notice u/s 143(2) - HELD THAT - When the AO has clearly mentioned in the assessment order that the notice under section 143(2) was issued on 16.11.2015 and the assessee did not raise any objection either before the AO or before the CIT(A) then merely because this fact was not recorded in the ordersheet by the AO would not lead to the conclusion that the fact recorded in the assessment order is false / incorrect. Merely because the AO has not mentioned in the order-sheet entries about the issuance of notice under section 143(2) would not change the fact that the notice was issued under section 143(2) of the Income Tax Act. Hence, once the notice was issued by the AO under section 143(2) then the validity of assessment for want of the notice cannot be questioned. Even otherwise the notice under section 143(2) is not a mandatory requirement for framing the assessment under section 153A or section 153C of the Income Tax Act. Though the judgments relied upon by the learned CIT DR are in relation to the assessment framed under section 153A but even when the assessment is framed under section 153C the procedure is provided only under section 153A of the Income Tax. Therefore, when no notice under section 143(2) is required for framing the assessment under section 153A then on the similar analogy, the same is not required even for framing the assessment under section 153C of the Income Tax Act as both are in pursuant to search and seizure action under section 132 of the Income Tax Act. ground no. 1 and 2 of the assessee s appeal, the same are dismissed. Validity of assessment order for want of satisfaction recorded by the AO - HELD THAT - It is pertinent to note that once the AO has specifically mentioned in the assessment order about the recording of satisfaction before the notice issued under section 153C of the Act and the assessee did not raise any objection either during the assessment proceedings or before the CIT(A) then merely because this was not mentioned in the ordersheet would not change the fact duly recorded by the AO in the absence of any contrary fact or material brought before us. Hence, the mere verbal contention of the assessee disputing the recording of the satisfaction, which find place in the assessment order itself, would not negate the fact of recording the satisfaction. Accordingly, we do not find any merit or substance in ground no. 3 and 4 of the assessment order and the same are dismissed. Unexplained income allegedly received by the assessee for vacating the premises - compensation for vacating the tenanted premises - AO noted that during the search in the case of Dinesh Kumar Pahuja at Lotus Apartment a document was seized which is a ledger account of land purchase in the books of M/s H.K. Infraventure Private Limited showing that Rs. 2.10 Crore has been paid to assessee and his brother - HELD THAT - When two documentary evidence are giving different version of a transaction then the document which is signed by the parties and not disputed by its signatories cannot be ignored while considering the issue of addition based on the entries recorded in the seized document which is neither signed by any party nor accepted by the parties and particularly by the assessee. AO has made no efforts to examine the person from whose possession the said document was found or to whom the document belongs being the ledger account of M/s H.K. Infraventures Pvt. Ltd - The assessee has made the request to the AO that Sh. Dinesh Kumar Pahuja is the person who can explain the seized document but the AO has not taken any step to examine those persons. Therefore, in the facts and circumstances of the case, when the assessee has denied the receipt of any payment other than Rs. 60 lac through cheques towards the compensation for vacating the tenanted premises and the said claim of the assessee is also supported by the memorandum of understanding between the parties which is executed and signed by all the three parties and also attested by the witnesses as well as notary then before making any addition of the alleged receipt of compensation in cash on the basis of the seized document, the AO ought to have examined the person from whose possession the said document was found and also the party whom the document belongs to. Therefore, Shri. Dinesh Kumar Pahuja as Secretary, Sindhu Sehkari Avas Samiti and Shri. Hemant Kumar Singh, Director, M/s H.K. Infraventures Pvt. Ltd., were required to be examined by the AO and the assessee would have been given an opportunity to cross examine before making the addition. Accordingly, we set aside the impugned order and remand the matter to the record of the Assessing Officer for fresh adjudication after examination of Shri. D.K. Pahuja and Shri. Hemant Kumar Sindhi qua the seized document and opportunity to cross examination be afforded to the assessee. Concurring Order - ACCOUNTANT MEMBER - Unexplained income allegedly received by the assessee for vacating the premises - Keeping in view the matter is to be restored to the file of the AO for denovo assessment on this issue of additions to the tune of Rs. 45 lacs as was made by the AO and later confirmed by CIT(A). The seized document, Assessee was confronted by Revenue with the aforesaid seized document, but the assessee asked for summoning of the said Mr. Dinesh Kumar Pahuja from whose possession this document was found and seized by Revenue during searches conducted u/s 132 on 05.12.2013, as is emanating from the appellate order passed by ld. CIT(A), but the department did not produce Mr. Dinesh Kumar Pahuja before the assessee for examination/cross examination . The assessee has denied to have known Mr.Dinesh Kumar Pahuja and also denied to have any dealings with M/s. Sindhu Sahkari Awas Samiti. It is also true that the assessee was tenant of the premises/property 17, Stanley Road, Allahabad and M/s Sindhu Sahkari Awas Samiti was earlier owner/landlord of the said property , which property was sold by M/s Sindhu Sahkari Awas Samiti to M/s H K Infraventures Private Limited vide registered sale deed dated 04.11.2011. Mr. Dinesh Kumar Pahuja was the President of M/s Sindhu Sahkari Awas Samiti, while his brother Mr. Dilip Kumar Pahuja was the Secretary of M/s Sindhu Sahkari Awas Samiti. Under these circumstances, it becomes important that all the relevant extracts of the statements recorded by Department during the course of search proceedings as well post search enquiries of Mr. Hemant Kumar Sindhi Director of M/s H K Infraventures Private Limited, Mr Dinesh Kumar Pahuja (President of Sindhu Sahkari Awas Samiti- and from whose possession this seized document was found and seized by Revenue during searches conducted u/s 132 on 05.12.2013) , Mr Dilip Kumar Pahuja(Secretary of Sindhu Sahkari Awas Samiti), or of any other relevant person, having bearing with the aforesaid alleged transactions of the assessee , be made available to the assessee for rebuttal , and the assessee be allowed to examine/Cross examination the said persons, keeping in view principles of natural justice. The factum of proving onmoney has to be based on considering the entire facts and circumstances of the case which may vary from case to case, and preponderance of human probabilities is to be considered before fastening any tax-liability. Contents of the part of the seized document LP-5/Page 124 and back page of 124 is admitted by M/s H K Infraventures Private Limited. The name of the assessee is recorded in the said seized document. It is for the assessee to rebut the said presumption. It is also true that this document was not seized from possession of the assessee. It is also true that the assessee has during the impugned assessment year, transactions with M/s. H K Infraventures Private Limited w.r.t. vacating of tenanted property situated at 17, Stanley Road, Allahabad, U.P.. Thus, with these remarks and reasons as enumerated above in my concurring order, set aside the impugned order and remand the matter to the record of the AO for fresh/denovo assessment , as enumerated in detail as above in this separate concurring order.

Summary

Issues Involved:
1. Validity of assessment under section 153C without issuing notice under section 143(2).
2. Validity of assessment order for want of satisfaction recorded by the AO.
3. Addition of Rs. 45 lakh as unexplained income allegedly received by the assessee for vacating the premises.

Issue-wise Detailed Analysis:

1. Validity of Assessment under Section 153C without Issuing Notice under Section 143(2):
The assessee argued that the assessment order dated 19th March 2016 was illegal as the statutory notice under section 143(2) was issued beyond the prescribed limitation. The AO recorded in the assessment order that a notice under section 143(2) was issued on 16.11.2015, and the assessee did not object during the assessment proceedings. The Tribunal held that the issuance of notice under section 143(2) is not mandatory for assessments under sections 153A or 153C, referencing the decision in ACIT vs. Sunshine Infraestate Private Limited. Thus, the Tribunal dismissed the grounds challenging the validity of the assessment for want of notice under section 143(2).

2. Validity of Assessment Order for Want of Satisfaction Recorded by the AO:
The assessee contended that the AO did not record the necessary satisfaction before invoking section 153C. The AO stated in the assessment order that satisfaction was recorded in writing before issuing the notice under section 153C. The Tribunal found that the mere absence of this fact in the order-sheet entries does not negate the AO's recorded statement in the assessment order. The Tribunal dismissed the grounds challenging the validity of the assessment for want of satisfaction.

3. Addition of Rs. 45 Lakh as Unexplained Income Allegedly Received by the Assessee for Vacating the Premises:
The AO made an addition of Rs. 45 lakh based on a seized document (Annexure L-5/page 124) found during a search, which allegedly showed payments to the assessee and his brother. The assessee argued that he received only Rs. 60 lakh through cheques as per a memorandum of understanding (MOU) dated 30.05.2012 for vacating the premises. The Tribunal noted that the seized document was not signed or accepted by any party and was found from a third party's premises. The Tribunal emphasized the need for the AO to examine and cross-examine relevant parties, including Mr. Dinesh Kumar Pahuja and Mr. Hemant Kumar Sindhi, to verify the seized document's authenticity. The Tribunal set aside the impugned order and remanded the matter to the AO for fresh adjudication after proper examination and cross-examination.

Conclusion:
The Tribunal dismissed the grounds challenging the validity of the assessment for want of notice under section 143(2) and satisfaction recorded by the AO. However, it set aside the addition of Rs. 45 lakh and remanded the matter to the AO for fresh adjudication after examining and cross-examining relevant parties. The appeals were partly allowed for statistical purposes.