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TMI Blog2015 (9) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... prospective customers for sale of plots in the aforestated land. The assessees paid Rs. 2.80 Crores in cash to Luthra family for the purchase of land. There was allegedly some dispute between the assessees and Luthra family, therefore, the deal could not be finalized. Due to scraping of the land deal, litigation arose between the assessees and the prospective buyers of plots. A search u/s. 132 was conducted at the premises of Luthra Group on 28-09-2006. During search loose papers and other materials with respect to land deal were found. The Assessing Officer on the basis of material seized held, that the cost of land purchased by the assessees from Luthra family is Rs. 5.21 Crores and cash Rs. 2.80 Crores was paid as on-money by Shri Jagtap, Shri Musale and others. The Assessing Officer issued notice u/s. 148 to the assessees on 13-02-2009. The Assessing Officer made addition of the entire on-money amount in the hands of the assessees, i.e. Rs. 46,66,666/- in the case of each assessee. The Assessing Officer also imposed penalty u/s. 271(1)(c) on the assessees. The amounts of penalty imposed by the Assessing Officer in each case vide separate orders of even date i.e. 28-03-2012, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were recorded in dummy cash book. The assessees have not disclosed the cash transaction with Luthra family in respect of land in their respective return of income. During assessment proceedings in case of Luthra Group, Luthra family admit the receipt of cash payment to the tune of Rs. 2.80 Crores from the assessees and Shri Shailesh D. Musale. Accordingly, notices u/s. 148 r.w.s. 147 were issued to the assessees. The on-money component was added in the income returned by the assessees on proportionate basis. The assessees filed appeal against assessment order before the Commissioner of Income Tax (Appeals). However, the same was withdrawn. Thus, the additions made during the assessment proceedings were accepted by the assessees and attained finality. The ld. DR submitted that the Commissioner of Income Tax (Appeals) during penalty proceedings accepted the contentions of the assessee without verification of the facts. There is no transaction in the books of account of the assessees with respect to on-money received from the prospective buyers of plots. The Commissioner of Income Tax (Appeals) accepted the theory of on-money without any basis. The assessees have neither filed any con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of plot and expenditure thereon, from total consideration, the net amount is to be taxed. Since, there was dispute between the assessees and the Luthra Group, the land deal went under litigation and hence, the plots could not be sold. The ld. AR further submitted that, the assessees accepted the addition made by the Assessing Officer in quantum proceedings and accordingly, withdrew the appeals filed before the Commissioner of Income Tax (Appeals). The withdrawal of the appeals by the assessees in assessment proceedings have no bearing in penalty proceedings, as both the proceedings are independent. The ld. AR prayed for dismissing the appeals of the Revenue. 6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. We have also considered the decisions on which the ld. AR of the assessees have placed reliance. During the course of search action u/s. 132 in case of Luthra Group, it was found that the assessees have made cash payment of Rs. 2.80 Crores for purchase of land. Reassessment proceedings were initiated against the assessees. The ld. AR has argued that since, the alleged incriminating material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t during the course of appellate proceedings before the CIT(A) the assessee took an additional ground of appeal to the effect that the reassessment proceedings initiated by the AO under s. 148 are illegal and void ab initio. In the instant case, the learned CIT(A) has correctly observed that the AO should have issued notice under s. 153C of the Act and should have framed the assessment under s. 153C r/w s. 153A of the Act. Sec.153C of the Act reads as under : "153C. Notwithstanding anything contained in s. 139, s. 147, s. 148, s. 149, s. 151 and s. 153, where the AO is satisfied that any money, bullion or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in s. 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of s. 153A." 8. On a perusal of the above provisions, it would be clear that the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar view has been taken by the Co-ordinate Bench of the Tribunal in the case of Sri Moti Punjabi, HUF (supra). Since, the substratum for making addition is itself bad in law, no penalty can be levied on such addition. 8. As far as the submissions of ld. DR with respect to withdrawal of quantum appeal before the Commissioner of Income Tax (Appeals) is concerned, we do not find any merit in the same. It is a well settled law that assessment proceedings and penalty proceedings u/s. 271(1)(c) are independent and distinct. The findings given in assessment proceedings cannot be considered as conclusive for the purpose of levy of penalty u/s. 271(1)(c). No doubt, the findings in assessment proceedings may have some significance in the penalty proceedings but they are not decisive or determinative. This law has been laid down by the Hon'ble Supreme Court of India in the case of CIT Vs. Khoday Eswarsa & Sons; 83 ITR 369 (SC) and is being consistently followed thereafter. 9. A perusal of the impugned orders shows that the Commissioner of Income Tax (Appeals) has deleted the penalty on the ground that the amount of on-money received as advance by the assessees from the prospective custom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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