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TMI Blog2013 (3) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... .A. No. 8248/Mum/2011, I.T.A. No. 8226 & 8177/Mum/2011, I.T.A. No. 8224 & 8169/Mum/2011, I.T.A. No. 8244/Mum/2011, I.T.A. No. 8179 & 8180/Mum/2011, I.T.A. No. 8229/Mum/2011, I.T.A. No. 8162/Mum/2011, I.T.A. No. 8230 & 8243/Mum/2011, I.T.A. No. 8234/Mum/2011, I.T.A. No. 8249/Mum/2011, I.T.A. No. 8235/Mum/2011, I.T.A. No. 8182/Mum/2011, I.T.A. No. 8174/Mum/2011, I.T.A. No. 8232/Mum/2011, I.T.A. No. 8167/Mum/2011, I.T.A. No. 8181/Mum/2011, I.T.A. No. 8256/Mum/2011, I.T.A. No. 8164/Mum/2011, I.T.A. No. 8253 & 8254/Mum/2011, I.T.A. No. 8252/Mum/2011, I.T.A. No. 8240/Mum/2011 For the Petitioner : Jehangir Mistri, Vijay Mehta, Ghanashyam Ramchandani For the Respondent : S. D. Shrivastava ORDER ITA No. 8237/Mum/2011 - 2008-09 This appeal by the assessee is directed against the order of the Ld. CIT(A)-41, Mumbai dt.27.10.2011 pertaining to A.Y. 2008-09. The Ld. Representatives of both sides , in unison , pointed out that there are 67 appeals pertaining to 52 different assessees, including the present one, which have been assessed on identical facts and the issues involved in all these 67 appeals are the same. On the strength of the statements made by the Ld. Representatives of both sid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on the decision of Hon'ble Delhi High Court in the case of Malik Bros (P) Ltd vs. CIT (162 Taxman 43). In the appellant's case, none of the land owners from whom land has been purchased by the appellant confirmed the receipt of cash payment. These remarks of the Hon'ble CIT(A) is erroneous remarks. It is therefore prayed that these erroneous remarks of the Hon'ble CIT(A) may kindly be deleted. 6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the charge of interest u/s.234B and 234C of the Act, having regard to the fact of the case. The appellant denies its liability for payment of interest u/s.234B & 234C of the Act." 3. With ground No. 1 & 2, the assessee has challenged the legality of the assessment order framed u/s. 143(3) r.w.s 153C of the Act. It is the say of the assessee that nothing has been found in the course of search and seizure proceedings which could be said to belong to the assessee. 4. Facts at the stage of assessment show that a search and seizure action u/s. 132 of the Act was carried out on 5.3.2009 in the case of Jai Corp group, its employees and close associates who were closely involved in the proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Dilip Dherai. The AO was convinced that these exhibits contain the details of land acquired in different villages wherein substantial cash payments have been made for acquisition of land in the villages whose name are mentioned in these exhibits. The AO was of the opinion that as per these pages, the total cash payments to the tune of Rs. 38.45 crores have been made for acquisition of land in various villages whose name appeared in these loose papers. When confronted with these documents, Shri Dilip Dherai in his subsequent statement dt. 20.5.2009 stated that the figures are only projected figures which can at the most be taken as the budgeted amount for the purchase of land in the villages. This contention of Shri Dilip Dherai was out-rightly rejected by the AO who was of the opinion that if the figures are projected, then there has to be some projected area of land which is absent therefore, the figures mentioned are not projected but actual amounts spent for the acquisition of the lands. 4.2. Referring to the initials MK and JT, the AO sought explanation from Shri Dilip Dherai asking him to explain why amounts of projected funds have been bifurcated in MK and JT to which Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he possession of Shri Dilip Dherai in form of cash receipts, etc. as discussed above which are for the period after 28.11.2008 (i.e. the date of page Nos. 22 & 23), therefore are not included in the amounts mentioned on page Nos. 22 & 23." 4.4 Now the question remain with the AO was that how to apportion the sum of Rs. 38.45 crores and 5 crores amongst OMSEZ companies i.e. 52 land companies. The AO has discussed the apportionment from para 15.1.1 onwards till para 15.1.5 of his order. The basis of the apportionment of expenses has been in the ratio of cost of land purchased in OMSEZ land companies and wherever more than one assessment year is found to be involved the amounts so apportioned to that OMSEZ companies has been further apportioned assessment year-wise in the ratio of cost of land purchased in each assessment year. Similar treatment was given to the amount of Rs. 5 crores. According to the AO, the share of the appellant company comes to Rs. 52,50,000/- which he added as income under the head "Income from other sources u/s. 69C of the Act as Unexplained expenditure." 5. Being strongly aggrieved by this assessment, the assessee carried the matter before the Ld. CIT(A). 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee or other land companies. Moreover, these seized documents do not even mention the name of the assessee or any other land company. The Ld. Counsel further pointed out that the entire assessment revolves around the search and seizure operation conducted in the residential premises of Shri Dilip Dherai and his statement recorded during the course of search and thereafter. However, the said Shri Dilip Dherai has no connection whatsoever with the assessee. Infact, while framing the assessment, the AO himself has given a finding that the seized documents belong to Shri Dilip Dherai. It is the say of the Counsel that the onus lies on the AO to establish that the seized documents belong to the assessee. The AO has grossly failed in discharging this onus. 9.1. Continuing his argument on this point of law, the Ld. Sr. Counsel submitted that the requirement of recording satisfaction is mandatory even if the AO of the searched person and the person whose assessment is sought to be reopened u/s. 153C of the Act is the same. The Ld. Counsel pointed out that no such satisfaction has been recorded in the case of searched person Shri Dilip Dherai. On the contrary, the AO has recorded the so cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in column 6 & 7 reflect the projected fund requirement for future acquisition of land. This statement was made for indicating fund requirement at later date. MK & JT mentioned on Pgs 22-23 are merely indicators of the discussion took place on different sites before the said date. For MK & JT Villages, a map showing the land taken upto date and land available for contiguity of land along with the details of Survey No., Area and land owners' name from which we need to acquire the balance land for which we have issued the cheques in favour of Brokers! Agents to show the landowners for acquisition of their lands were also submitted to the A.O. 5. The seized documents of Pgs 22 & 23 do not reveal anything which prove that the appellant has incurred any cash expenditure as alleged by the A.O. for purchase of land. Column 6 & 7 of seized material at Pg Nos.22-23 are merely projected and budgeted expenditure to be incurred in case further lands are acquired. This was purely an estimation. In case this expenditure was an actual expenditure as alleged by the A.O. then various details like names & addresses of the Brokers, names and address of sellers! persons to whom the amount is paid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be upheld. (iii) The reliance is also placed on the following decisions, wherein it has been held that additions made on dumb entries/ documents without corroborative evidences are not sustainable. a) Atul Kumar Jam v. CIT (1999) 64 TTJ 786 (Delhi) b) Rakesh Goyal v. ACIT (2004) 87 TTJ 151 (Delhi) c) Rakesh Kumar lain v. DCIT (2004) 89 TTJ 203 (Delhi) d) N.R.Malhan v. DCIT (2004) 91 TTJ 908 (Delhi) e) Amarjit Singh Baxi v. ACIT (2004) 263 ITR (AT) 75 f) ACIT v. Ashokkumar Vig (2008) 15 SOT 85 (Ranchi) g) MM Financiers v. DCIT (2007) 17 SOT 5 (Chennal) h) Pankaj Dayabhai Patel HUF v. ACIT (1999) 63 TTJ 790 (Ahd.) I) Radhe Developers (2010) 329 ITR 1 (Guj). j) Shri Kapidev vs. JCIT (Spl. Range, Delhi) ITA No.2259/Del/2002/A.Y. 1997-98 dated 22.03.2012. It is evident that the addition of Rs. 38.45 crore and Rs. 5.01 crore is based only on conjectures and surmises. There is no corroborative evidence on record to prove that the appellant has actually incurred the alleged expenditure in cash. There is nothing on record to establish as to whom the said amount has been paid. There is also nothing on record to prove the source of the alleged cash expenditure. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - that is - this section is concerned with the "Assessment of Income of other person" - and as held by Hon'ble Supreme Court in the case of K.P. Varghese Vs. CIT 131 ITR 597(SC) wherein it has clearly been held that the 'marginal note' of the section can be referred to remove any ambiguity if any - as it explains the 'Drift' of the section and its purpose and intention - in this case the purpose and intention being to avoid multiplicity of proceedings u/s 153A and 153C of I.T. Act - and also by removing the expression 'undisclosed income' from section 158BA - making it simple for initiating action u/s 153C - on the basis of seized material only. Hence, as per Heydon's Rule - or 'Mischief Rule' also - only that Interpretation should be given which enhances the remedy and suppresses the mischief and does not allow subtle variations - as in the present case of trying to import a hypertechnical meaning to the word 'belong' - out of context - and the same should be construed harmoniously with the context - the purpose and intention - which the law seeks to achieve. Also, by referring to the history of the legislation - it becomes clear that by putting a very narrow and restricted me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the idea of a casual association. It involves the notion of continuity and indicates one more or less intimate connection with the person over a period of time. The books of account or documents seized during the course of search had a close association with the group concern of 'R'. It recorded the transaction carried out by that group. It did not record the transaction carried out by the assessee. Under the Wealth Tax Act, 1957 assets belonging to the assessee were taxable. The expression 'belonging' to the assessee - connotes both the complete ownership and limited ownership of interest. Of course, belonging to is capable of connoting interest which is less than an absolute perfect legal title. However, there should be some limited ownership of interest, if it is to be permitted that the assets belong to the assessee. Hence, in the present case - the connection is not casual but CAUSAL (the chart given during the course of hearing clearly shows the land mentioned on seized documents and appellant companies dealing in it) and since all the documents are written and signed by Mr. Dilip Dheria who as per statement on oath of Mr. Shukia and Mr. Kapadia the Directors of Avkash Lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does hence is of no avail. Also, reliance placed by Ld. Counsel on Wealth Tax decisions for understanding the meaning of the word 'belongs' are of no relevance as they are out of context - the sense and purpose in Wealth Tax is entirely different from the sense and purpose of section 153C which is to Assess Income based upon seized documents 'belonging' to another person and NOT questions of ownership etc. - hence, the word 'belongs' as used in section 153C can only mean 'relates' or 'pertains' to the other person - as explained by Hon'ble Supreme Court in the case of N.C. Buddhiraja 204 ITR 412 (SC) and no other meaning can be given to it. Thus, since all the 'seized documents' - 'belong to' - 'relate to', 'pertain to' the Appellant - Revenue has rightly initiated proceedings u/s 153C of I.T. Act, which may kindly be sustained and upheld. 10. We have considered the rival submissions, perused the orders of the lower authorities and the documents referred to and relied upon by the rival parties. We find that the entire assessment revolves around the documents seized during the course of search and seizure proceedings at the residential premises of one Shri Dhilip Dherai. The mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.] 12. Before proceeding further let us also consider the provisions of Sec. 158BD as provided under Chapter XIVB which has become non operative qua search etc. made after 31.5.2003. 158BD-Undisclosed income of any other person. "Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed [under section 158BC] against such other pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough this satisfaction note, a logical question is flashing in our mind and which is - when the assessment proceedings are concluded and all other consequential proceedings are completed, it is mandatory to release the seized material to the assessee. The question is - when these seized documents would be released , who will be the recipient? The obvious answer is Shri Dilip Dherai because the impugned documents were seized from his premises. Therefore the seized documents cannot belong to 52 companies because one document can belong to one person. Even in the satisfaction note, a sample copy of one of these 52 companies is given to us and it is the say of the Ld DR that all satisfaction notes are exactly worded with change in the name of the assessee, it is beyond one's understanding how could the AO come to know the names and purchase cost of lands in these 52companies without even looking into their respective balance sheets. Therefore, is the satisfaction note prepared on the date mentioned in it or is it back dated after looking into the balance sheets of these 52 companies .If that is the case, than on the date of preparing the satisfaction note the AO had no occasion to kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the legislative intent, the legislature could have provided in the section itself that when the search cases are centralized, there is no need for recording any satisfaction. That being not the case, we do not accept the submission of the Ld. DR on this point. The Ld. DR has further relied upon the decision of the Hon'ble Delhi High Court 346 ITR 177 according to which at the time of recording satisfaction only prima facie grounds have to be mentioned and not that there are conclusive evidences with AO at this stage of unrecorded income etc. Infact, this decision is in favour of the assessee because atleast there should be some prima facie ground, which is absent in the present case. As pointed out earlier, the seized documents contain only the names of the villages where the lands have been purchased. By looking at the names of the villages, it is beyond our understanding how could one come to know that 52 companies have purchased lands in these villages. The third decision relied upon by the Ld. DR on this point is that of Hon'ble Kerala High Court 26 Taxmann.com 54 by which the Ld. DR has emphasized that there is no need whether seized evidence etc. represents or prove undisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he money, bullion, jewellery or other valuable article or thing or books of account seized or requisitioned belong to such other person, whereas all that is required u/s. 158BD is that the undisclosed income should belong to any other person. 18. Thus it is clear that before issuing notice u/s. 153C, the primary condition has to be fulfilled and which is that the money, bullion, documents etc., seized should belong to such other person. If this condition is not satisfied, no proceedings could be taken u/s. 153C of the Act. The seized documents marked as page 1 & 2 of our order do not belong to the assessee but were seized from the residential premises of Shri Dilip Dherai. It is not the case of the Revenue that the impugned documents are in the handwriting of the assessee. At this stage, it would be fair to the Revenue that it cannot be in the handwriting of the assessee since the assessee is a legal person, so to extend our observation, the seized documents are not even in the handwriting of any person related with the assessee because Shri Dilip Dherai is neither a Director nor a shareholder/member nor even an employee of the assessee company. We may mention at this stage that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd has to be rejected as an afterthought. For this preposition the Ld DR relied upon several judgements . It is the say of the Ld. DR that the statement of Shri Dilip Dherai was recorded u/s. 132(4) of the Act on 5.3.2009 whereas Shri Dilip Dherai has filed an affidavit on 14.5.2009 retracting from his admission on 5.3.2009. The Ld. DR pointed out that after 5.3.2009 Shri Dilip Dherai appeared before the DDIT on 6.4.2009, 8.4.2009, 20.4.2009, 22.4.2009 & 8.5.2009 and none of these appearances Shri Dilip Dherai never stated that his statement on oath recorded on 5.3.2009 was done under threat, force, coercion. Therefore, the affidavit filed by Shri Dilip Dherai is only an afterthought. In his written submission, the Ld. DR has pointed out that Shri Dilip Dherai in order to escape the consequences of law , has filed the affidavit as an afterthought which deserves to be ignored especially when the affidavit has been controverted and repelled by the Authorised Officer Shri Manoj Kumar. Thereafter in his written submission, the Ld. DR went on to explain how the cash transactions have taken place as mentioned in the seized documents. It is the say of the Ld. DR that on perusal of these s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Ld. DR in his submission. The entire dispute revolves around the alleged cash payment amounting to Rs. 43 crores approx. and which has been added u/s. 69C of the Act. Sec. 69C of the Act reads as under: "Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the AO, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year." 23. A perusal of the aforementioned section shows that the requirement of the section is that an expenditure has been found to have been incurred by an assessee in any financial year. Consequently, the assessee fails to indicate satisfactorily the source of such expenditure or any part thereof. Then section 69C is attracted in such circumstances. The emphasis is on the fact that "an assessee has incurred any expenditure". This itself show that the assessee must have been found to have incurred any expenditure to invoke the provisions of Sec. 69C of the Act. Even if for the sake of arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the sale of land at different villages brought on record to show that an amount other than the payment of consideration has exchanged hands. No confession from the sellers have been brought on record. The entire additions have been made merely on the strength of loose papers found during the course of the search not supported by any independent authority. Considering the entire addition, in the light of the provisions of Sec. 69C, as per A.O's own interpretation, investments in purchase of land have been fully financed by some other persons, therefore, the addition in the hands of the assessee cannot be justified as the assessee has not incurred any expenditure. There may be one more possibility that the persons who were doing land purchase might have inflated the sale price in these loose sheets just to extract monies from their higher authorities in the guise of On-Money to be paid to the vendors. May be because of his possibility no documents were found to show that the money actually changed hands. 25. A perusal of the balance sheet of the assessee show that the authorized, issued and subscribed paid up capital is at Rs. One lakh and the assessee had not done any business du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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