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TMI Blog2014 (9) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... t is purely on the basis of surmises and estimate and it is not a case of any incriminating material seized during the course of search. The issue relating to validity of assessments made by the AO was not only specifically raised by the assessee in the appeals filed before the CIT(A), but it was also vehemently argued by making a detailed submission and this position, which is clearly evident that the legal issue challenging the validity of assessments was not given up by the assessee - the issue relating to validity of assessments is a legal issue and the assessee is entitled to raise the same for the first time even before the Tribunal as decided in National Thermal Power Corporation Ltd. v. CIT [1996 (12) TMI 7 - SUPREME Court] – thus, the matter is remitted back to the CIT(A) for adjudication – Decided in favour of assessee. - ITA Nos. 1436 & 1437/Bang/2012, ITA Nos.1468 & 1469/Bang/2012 - - - Dated:- 4-7-2014 - Pramod M. Jagtap, AM And N. V. Vasudevan, JM,JJ. For the Petitioner : Shri Naveen Tao For the Respondent : Ms. Priscilla Singsit, CIT-III (DR) ORDER Per Pramod M. Jagtap, Accountant Member These four appeals, two filed by the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any books of account regularly maintained for the said year, the assessee estimated its income at 20% of the total registrations, which came to ₹ 3,95,31,880. After claiming the loss on deal cancellation of ₹ 4,50,00,000 against the income so estimated, net loss of ₹ 54,68,120 was declared by the assessee in the return of income for the A.Y. 2008-09. Thereafter, the assessee also filed revised return for A.Y. 2008-09 claiming the loss on deal cancellation of ₹ 3,19,45,479 on the basis of date of payment and accordingly declared the total income of ₹ 75,86,401 in the revised return. 5. During the course of assessment proceedings, the issue relating to estimation of income of the assessee from business as a builder and real estate agent was examined by the Assessing Officer and on such examination, he found that the assessee could not explain the basis of estimating its income at 10% 20% of the total registrations of land made for the A.Ys. 2007-08 2008-09 respectively. Although the AO initially proposed to estimate income of the assessee at 30% of the registrations made, he revised the same subsequently to 50% and required the assessee to explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basic addition made by the A.O. has been done on the basis of certain scribblings made on various cheque books and cheque leaves. The A.O. has not brought any documentary evidences to support the additions or any seized document that has been brought on record by the A.O. to prove that these transactions have been made. In contrast to it, the assessee has given all the details of the receipts and expenses made along with documentary evidences also. Since there are certain expenses that has not been fully vouched by the assessee that does not mean that the expenses would not have taken place in the process of business. The business of the assessee is of land procurement which entails lot of expenses which are to be made in cash for which the assessee has not been able to provide documentary evidence. The A.O. had himself proposed to tax it at 30%, however afterwards he decided to tax it at 50%. Keeping in view the details furnished, the MOUs given the profit should be calculated at 30% of the turnover. 9. As regards the addition made by the AO in A.Y. 2007-08 on account of unexplained investment allegedly made by the assessee to the extent of ₹ 2.89 crores, the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) in its order dated 06/09/2012 had made an erroneous finding that we have not pressed this ground and she has hence dismissed this ground as not pressed. 3. I state that we had raised this legal ground in our revised grounds of Appeal and have also filed our written submission/argument on the same. We had in no stretch of imagination had given up this legal ground of contention. 4. Therefore it is prayed that the Legal grounds raised by the assessee be adjudicated by this Hon ble Income Tax Tribunal in the interest of justice and equity. 14. Although the ld. DR has raised objection to the stand taken by the assessee on this preliminary issue, keeping in view the specific averment made by the ld. CIT(A) in her impugned orders that the legal issue relating to validity of assessments was not pressed by the assessee, we find that the revised grounds of appeal were filed by the assessee before the ld. CIT(A) and the same, as reproduced by the ld. CIT(A) on pages 2 3 of her impugned orders, specifically included ground Nos. 3 to 6, which challenged the validity of assessments made by the AO on various grounds. The said grounds are reproduced hereunder:- 3. The order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the search to arrive at a satisfaction to initiate and continue with the search proceeding u/s. 153C. It is only after the survey that the department has issued notice against the appellant herein. If at all the department was satisfied with regards to the finding against the appellant in the search conducted they should have issued the notice based on those documents itself, than conducting the survey against the appellant. Thus the Learned assessing officer has erred in invoking and continuing with the provisions of section 153C pursuant to the survey u/s. 133A against the appellant herein. Thus, it is submitted that the assessing officer was not satisfied with the finding in the search to invoke the jurisdiction under section 153C, 8. The mandatory conditions of recording satisfaction not complied with to invoke the jurisdiction under section 153C of the Act. 8.1 It is submitted that reasons for issue of notice u/s. 153A r.w.s 153C of the Act have not been given to the appellant, the appellant has reasons to believe that the reasons for the issue of notice u/s. 153A r.w.s 153C have not been recorded. Thus the notice is issued in contravention of the provision of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction such action of AO was bad in law. Lunawat Jayant Maniklal v. Dy. CIT (2008) 297 ITR (AT) 155 (Pune) 8.7 Reliance is placed on the decision in 333 ITR 315 (Del) 337 ITR 258 (Raj) [meaning of satisfaction 337 ITR 217 (All)] wherein it was held that it is the duty of AO to record satisfaction that undisclosed income discovered during search belonged to third person. 9. The impugned addition in the assessment u/s.153C r.w.s 143(3) is bad in law as the entire assessment is made on the basis of the documents found at the time of survey u/s.133A and not on the basis of the documents found and seized at the time of search u/s.132 of the Act: 9.1 It is submitted that, it is stated n the assessment order that the search u/s.132 of the Act was conducted on 13.02.2009 and 17.03.2009 in the case of M/s. Mohtisham Complexes Pvt. Ltd., and incriminating document marked as A/MCPL/64 dated 13.02.2009 and A3/MCPL/16 dated 17.03.2009 were seized. It is further stated in the assessment order that these seized documents contained the MOU between the Assessee M/s. Prithvi Developers and Builders, Mangalore and M/s. Mohtisham Complexes Pvt. Ltd., Mangalore for acquisition of land. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in search cases needs to be supported by the seized materials found at the time of search. Absolutely, no material seized in the search shows that it is undisclosed income. It is clear that the aforesaid addition is made on the basis of the scribbling found in the Cheque book counter foils found in the survey which was conducted subsequent to the search proceedings. The assessment is not on the basis of the information secured from the incriminating material but on assumption and presumption. Thus, the addition in assessment is bad in law on the facts and circumstances of the case. Reliance is placed on the decision of Jurisdictional High Court in case of CIT vs Shri Shyam Sundar Sipani in ITA NO. 10/2006 dated 14.09.2011 and ITA No. 1295/2006 dated 30.11.2011. 10.5 In fact, the learned assessing officer has made addition as Unexplained investments of ₹ 2,89,75,467/- by comparing the assessing officer s own determined estimated income with that of the determined Unexplained investment and brought to tax the higher of the both, which is not permissible in search proceedings. Hence, the assessment is purely on the basis of surmises and estimate and it is not a case of any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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