9911796707
TMI Blog2007 (4) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of Dr. M.C. Gupta, but neither during the course of search nor even thereafter the Department has tried to record his statement to substantiate their stand that document was belonging to any of the companies in whose hands the addition was made. This document indicated transaction in respect of 3 big has of land, alleged to be purchased from three persons, but in the books of none of the assessees there was any such transaction for 3 bighas, so as to corroborate the same with seized document. Furthermore, the Department itself has carried out the valuation of the land shown by the assessee in their regular returns, by its own valuation cell, which has also valued the same near to the price at which these were shown by the assessee in their books of account. The registering authorities have also registered the land purchased by the assessee at the price shown in the sale deed. Thus, neither the State Government being the registering authorities supports the value taken by the AO on the basis of dumb document, nor the valuation cell of the IT Department itself supports the rate of land shown in the document so found. Applying the propositions laid down by the various authorities a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of land purchased at Chawla by holding that the same have not been shown in the return but paid as per seized document without appreciating the fact the amount incurred by the appellant on the stamp duty etc. amounting to Rs. 2,59,185 at the time of purchase of land at Chawla includes the actual amount paid for commission, mutation charges, NOC charges etc. Therefore, addition of Rs. 50,000 made by the AO as unexplained investment in land is liable to be fully deleted. 4. On the facts and in the circumstances of the case, the AO had no jurisdiction to pass an assessment order under s. 158BD of the IT Act, 1961, since no search had taken place in the case of the appellant and satisfaction as required by s. 158BD of IT Act, 1961 had not been recorded. The order of AO being without jurisdiction requires to be cancelled on this ground. 5. On the facts and in the circumstances of the case, the AO has erred in initiating penalty proceedings under s. 158BFA(2) of IT Act, 1961. The same is liable to be dropped. 6. The CIT(A) has erred in law in confirming the addition made on account of purchase of land at Village Chawla. The transaction was done at arm's length at prevailin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch had taken place in the case of the appellant and satisfaction as required by s. 158BD of IT Act, 1961 had not been recorded. The order of AO being without jurisdiction requires to be cancelled on this ground. 5. On the facts and in the circumstances of the case, the AO has erred in initiating penalty proceedings under s. 158BFA(2) of IT Act, 1961. The same is liable to be dropped. 6. The CIT(A) has erred in law in confirming the addition made on account of purchase of land at Village Chawla. The transaction was done at arm's length at prevailing prices at the time of purchase and copy of lease deed executed in the same locality at these prices had also been furnished. 7. A document seized at the time of search could not form the basis for forming opinion on cost of purchase which had taken place a few years back. 8. The circle rates of these properties even now are at much lower rates. 9. The appellant craves leave to amend, modify or alter any of the (grounds of) appeal stated above either before or at the time of hearing of the appeal." Grounds in IT(SS)A No. 345/Del/2005: "1. On the facts and in the circumstances of the case, the CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e locality at these prices had also been furnished. 7. A document seized at the time of search could not form the basis for forming opinion on cost of purchase which had taken place a few years back. 8. The circle rates of these properties even now are at much lower rates. 9. The appellant craves leave to amend, modify or alter any of the grounds of appeal stated above either before or at the time of hearing of the appeal." Rival contentions have been heard and record perused. In all these appeals, grounds are common and the additions have. been made while framing assessment under s. 158BD r/w s. 158BC, on the basis of very same document marked as Annex. AD-46. We have, therefore, heard all the appeals together and are now disposing the same by this consolidated order for the sake of convenience and brevity. Facts in brief are that the search action under s. 132 of the IT Act, 1961 was carried out on 14th Feb., 2001 at various premises pertaining to companies belonging to Usha Group promoted by Shri Anil Rai and Shri Vinay Rai. During the course of search number of loose documents were found and seized, few of which also pertain to assessee company. Notice under s. 158B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uot; as mentioned on the seized document stands for. The legal presumption under s. 132(4A) of the IT Act, 1961 regarding the document/books of account, etc. found during the course of search is available against the person in whose possession or control such documents were found during the course of search. Since the document was found during the course of search at premises A-41, MCIE, Badarpur, New Delhi, therefore, it cannot be presumed that the document belongs to the assessee company and therefore, under the law no adverse inference can be drawn against the assessee company. In support of this contention assessee has also referred to number of case law. 4. The AO did not accept the assessee's contention and observed that in the return of income filed by the assessee, the assessee had shown purchase of land at Village Chawla. He, therefore, applied the rate of Rs. 20 lakhs per acre with respect to the land holding and made addition on account of difference between the value shown by the assessee in the return of income vis-a-vis the value estimated by the AO by applying rate of Rs. 20 lakhs per acre. 5. By the impugned order, the CIT(A) confirmed the addition by observin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s seized document clearly indicates the prevailing market rate of land situated at Village Chawla and a further bifurcation has been done with reference to the amount at which registration is to be done and entry to be made in the books of account, vis-a-vis the amount which was paid in cash over and above the value recorded in books of account. As per the learned Departmental Representative, the entire document is to be considered and it is a well known fact that in real estate business, the registration is being done at a lower value than the actual price at which these transactions are actually entered into. Since the document was found indicating the actual price at which transaction was entered into, the AO was perfectly justified in applying the rate of land noted on the seized document so as to find out the unaccounted money invested by the various group companies. 9. We have considered the rival contentions, carefully gone through the orders of the authorities below and also perused the seized documents placed on the record. We had also deliberated on the case law relied by the lower authorities in their respective orders, as well as cited by the learned Authorised Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such other person for proceeding against such other person. Thus, prima facie, the AO is required to be satisfied with the document found during search as belonging to some other person. Unless the name of such other person is noted on the document so found and seized, or any noting is found on such document which can reasonably be co-related with such other person, such dumb document cannot be made the basis for making addition in the hands of such other person under s. 158BD of the Act. The document so seized, in the instant case, during the course of a third party did not bear the name of any of the assessee company in whose hands the AO had made addition under s. 158BD of the Act nor the noting on the seized paper indicated any unaccounted money having been invested by the assessee in the purchase of land which was duly disclosed in the regular returns much prior to the date of search. Even during the course of search or thereafter, the Department has not recorded any statement of the person from whose possession the document was found, so as to find out as to whom this document belongs. No corroborative material of any nature whatsoever was brought on record by the AO to indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its valuation cell, however instead of supporting the AO's allegation, the Valuation Officer indicated the fair market value of land at the price recorded by the assessee in its books of account, that was the reason that AO did not give copy of such valuation report, in spite of written request of the assessee. The assessee vide its letter dated. 17th May, 2004, asked the AO to give copy of valuation report, however the AO declined to give copy of valuation report prepared by the officers of his Department i.e. valuation cell. The AO stated in his order that valuation report is erroneous insofar as it relies on the comparable instances for purchase of similar properties i.e. it goes by the registration value of the comparable instances of purchases does not take into account the market value. 10. Applying the propositions laid down by the various authorities as referred by the learned Authorised Representative during the course of hearing, to the facts and circumstances of the present case where addition has been made on the basis of dumb document, the AO could not corroborate the document or its contents with any other information or evidence, whereas on the contrary the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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