2017 (7) TMI 803 - AT - Income Tax

Assessment u/s 153C - Held that - CIT(A) clearly mentioned that the assessment order nowhere mentions any part of seized material belonged to Assessee Company but the seized material is that of associates/group companies of BPTP Group. The assessee is also group company of the BPTP Group. This fact was never denied by the assessee at any point of time. The reliance by the Ld. AR on the order of M/s. Westline Developers Pvt. Ltd. is of no help to the assessee as the distinguishing factor has been pointed out by the Revenue. The present case is regarding Section 143(3) thus the facts are different from the ratio laid down in case of Westline Developer Pvt. Ltd.. The CIT (A) has rightly made observations that there is concrete evidence in form of seized material to show that interest is paid and received by seller on the extension of PDCs while analysing the seized documents. The CIT(A) s order is upheld.

Summary

Issues:
1. Validity of assessment order under different sections of the Income Tax Act.
2. Relevance of seized material in determining unaccounted interest on post-dated cheques (PDCs).
3. Calculation and quantification of unaccounted interest paid on PDCs.
4. Nexus of seized material with the assessee company.
5. Comparison with a previous case involving similar seized material.

Issue 1: Validity of assessment order under different sections of the Income Tax Act:
The appeal raised concerns regarding the assessment order made under Section 143(3) of the Income Tax Act, contending that it should have been conducted under Section 153C. The contention was rejected by the CIT (A), leading to an appeal before the ITAT Delhi.

Issue 2: Relevance of seized material in determining unaccounted interest on PDCs:
The assessing officer relied on seized material indicating unaccounted interest payments on post-dated cheques (PDCs) given to land sellers by the assessee company, a part of the BPTP Group. The material suggested a pattern of unaccounted expenditure, prompting the assessment of undisclosed interest paid by the assessee.

Issue 3: Calculation and quantification of unaccounted interest paid on PDCs:
The assessing officer computed the unaccounted interest paid by the assessee to various land sellers based on the rate of 1.25% per month on the PDC amounts. The total unaccounted interest paid was quantified and presented in the assessment order.

Issue 4: Nexus of seized material with the assessee company:
The CIT (A) observed that the seized material used by the assessing officer did not specifically pertain to the assessee company but to other group companies of the BPTP Group. However, the CIT (A) found concrete evidence in the seized material indicating the payment and receipt of interest on the extension of PDCs by the sellers.

Issue 5: Comparison with a previous case involving similar seized material:
The appellant compared the present case with a previous case involving similar seized material, arguing that the facts were identical. However, the Revenue distinguished the cases, emphasizing that the current matter pertained to Section 143(3) of the Act, unlike the previous case related to Section 147.

In conclusion, the ITAT Delhi upheld the CIT(A)'s decision, stating that there was substantial evidence in the seized material to support the payment and receipt of interest on PDC extensions. The appeals from both the assessee and the revenue were dismissed, affirming the assessment order's validity and the calculation of unaccounted interest on PDCs.