2018 (10) TMI 1346 - AT - Income Tax

Initiation of proceedings u/s. 153C - unexplained expenditure in lands u/s.69C - seized papers from the premises of Jai Corp Group and others as relied upon for making additions in the hands of the land aggregators whose names appeared in the said documents - seized document which forms the basis of the present proceedings - Held that - The seized papers seized from the premises of Jai Corp Group and others cannot be relied upon for making additions in the hands of the land aggregators whose names appeared in the said documents. It is not the case of the Revenue that the judgments/decisions delivered in the cases of appeals involving M/s. Arpit Land Pvt. Ltd., M/s. Lavanya Land Pvt. Ltd. and Harsha Land Private Limited 2017 (2) TMI 553 - BOMBAY HIGH COURT etc. do not relate to such land aggregators. These names also appeared in the said seized papers along with the name of the assessee. On similar facts, the Hon ble Jurisdictional High Court in the case of CIT Vs. Arpit Land Pvt. Ltd., as well as in the case of M/s. Ambit Reality Pvt. Ltd., held that the said seized documents cannot be held to be belonging to the assessee. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of proceedings under Section 153C of the IT Act, 1961.
2. Legitimacy of invoking Section 153C without seized materials belonging to the appellant.
3. Addition of unexplained expenditure under Section 69C.
4. Relevance of new evidence introduced by CIT(A).
5. Reliance on the Delhi High Court decision in Malik Bros (P) Ltd vs CIT.
6. Charge of interest under Sections 234B and 234C.

Issue-wise Detailed Analysis:

1. Validity of Proceedings under Section 153C:
The appellant contended that the initiation of proceedings under Section 153C was invalid as no assessment or reassessment proceedings were pending on the date of the search under Section 132. The Tribunal found that the seized documents did not belong to the appellant, referencing similar cases where the courts ruled in favor of the assessees on technical grounds. The Tribunal concluded that the seized documents could not be used to initiate proceedings under Section 153C against the appellant.

2. Legitimacy of Invoking Section 153C:
The appellant argued that invoking Section 153C was invalid because no seized items belonged to the appellant that disclosed unaccounted expenditure. The Tribunal noted that the jurisdictional High Court and Supreme Court had ruled in similar cases that documents seized from third parties could not be used to initiate proceedings under Section 153C against the appellant. The Tribunal allowed the appellant's ground on technical grounds, referencing judgments that supported the appellant's position.

3. Addition of Unexplained Expenditure under Section 69C:
The appellant challenged the addition of ?3.83 crores as unexplained expenditure under Section 69C. The Tribunal found that the addition was based on seized documents that did not belong to the appellant and that there was no material evidence to substantiate the cash payments alleged by the Revenue. The Tribunal referenced previous judgments where similar additions were not sustained due to lack of evidence.

4. Relevance of New Evidence Introduced by CIT(A):
The appellant argued that new evidence introduced by CIT(A) was irrelevant and out of context. The Tribunal noted that the CIT(A) had relied on evidence that was not directly related to the appellant's case and that the Assessing Officer had not referenced this evidence in the assessment order. The Tribunal dismissed this ground as academic, given the decision on the primary issue.

5. Reliance on the Delhi High Court Decision in Malik Bros (P) Ltd vs CIT:
The appellant contended that the CIT(A) erroneously relied on the Delhi High Court decision in Malik Bros (P) Ltd vs CIT. The Tribunal found that the facts of the appellant's case were different from those in the Malik Bros case, as none of the landowners confirmed receipt of cash payments. The Tribunal dismissed this ground as academic, given the decision on the primary issue.

6. Charge of Interest under Sections 234B and 234C:
The appellant denied liability for interest under Sections 234B and 234C. The Tribunal dismissed this ground as consequential, given the decision on the primary issue.

Conclusion:
The Tribunal allowed the appellant's appeal on technical grounds, finding that the seized documents could not be used to initiate proceedings under Section 153C against the appellant. Consequently, the Tribunal dismissed the remaining grounds as academic or consequential. The appeal was partly allowed.