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2014 (10) TMI 777 - AT - Income TaxSearch and seizure operation u/s 132 - Addition u/s 153C Addition of cash payment on the basis of seized documents Held that - The seized document was not found from the premises of the assessee nor was it signed by the employee of the assessee nor the name of the assessee was appearing in this seized document on the basis of which addition was made by the AO in the assessment framed u/s 153C read with section 153A of the Act - there is no basis for sustaining the addition in respect of cash transactions in the hands of the assessee - CIT(A) was not justified in sustaining the addition made by the AO in proceedings u/s 153C read with section 153A of the Act on the basis of inference remotely drawn - there was no basis with the AO to make the addition in the hands of the assesee in a proceedings u/s 153C read with Section 153A thus, the order of addition made by the CIT(A) is set aside and the matter is remitted back to the AO to delete the addition towards cash payment said to be made by the assessee company to various farmers based on the seized annexure from Shri Surender Modi Decided in favour of assessee.
Issues Involved:
1. Justification of the addition of Rs. 4,80,97,125/- towards alleged cash payment based on seized documents. 2. Attribution of seized annexure to the appellant under Section 153C of the Income Tax Act. 3. Legality and sustainability of the addition based on presumption and surmises. Issue-wise Detailed Analysis: 1. Justification of the Addition of Rs. 4,80,97,125/-: The assessee challenged the addition of Rs. 4,80,97,125/- made by the AO towards alleged cash payments to farmers, arguing that the seized annexure from Shri Surender Modi did not belong to the appellant company. The annexure contained details of property transactions by a third party, Inmon Buildcon (P) Ltd., which were verified by the AO and CIT(A). The assessee contended that the addition was illegal and arbitrary since the documents did not contain the name of the assessee company and were not related to any property transactions by the assessee. The CIT(A) upheld the addition based on the decision of the Hon'ble Delhi High Court in CIT Vs. Anil Kumar Bhatia and other cases. The Tribunal found that the seized document was not from the premises of the assessee, nor was it signed by any officer of the assessee company. The Tribunal concluded that there was no basis for the addition in the hands of the assessee, especially when the CIT(A) had accepted that the transactions were related to Inmon Buildcon (P) Ltd. 2. Attribution of Seized Annexure to the Appellant Under Section 153C: The assessee argued that the seized documents did not belong to them and hence could not be the basis for proceedings under Section 153C. The documents were found at the premises of Shri Surender Modi, and the satisfaction note did not reference Annexure A-29, Page 66. The Tribunal noted that the satisfaction note is crucial for assuming jurisdiction under Section 153C. Since the satisfaction note did not reference the seized annexure, the assessment was deemed illegal and without jurisdiction. The Tribunal also noted that the seized document did not contain the name of the assessee, was not signed by any officer of the assessee company, and was not found at the premises of the assessee, thus deeming provisions of Section 292C were not applicable. 3. Legality and Sustainability of the Addition Based on Presumption and Surmises: The assessee contended that the addition was based on presumption and surmises without proper application of mind. The Tribunal found that the addition was made without sufficient evidence, as the seized document did not belong to the assessee and the transactions were related to Inmon Buildcon (P) Ltd. The Tribunal also noted that the CIT(A) had dropped enhancement proceedings against the assessee after verifying that the transactions were accounted for by Inmon Buildcon (P) Ltd. The Tribunal concluded that the AO had no basis to make the addition in the hands of the assessee, and the CIT(A) was not justified in sustaining the addition. Conclusion: The Tribunal set aside the orders of the authorities below regarding the addition of Rs. 4,80,97,125/- and directed the AO to delete the addition. The appeal was allowed in favor of the assessee, and the order was pronounced in the open court on 29th January, 2014.
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