9911796707
TMI Blog2013 (3) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... gs could be taken u/s. 153C of the Act - Here the seized documents do not belong to the assessee but were seized from the residential premises of Shri Dilip Dherai - Decided in favor of assessee - I.T.A. No. 8237/Mum/2011, I.T.A. No. 8165/Mum/2011, I.T.A. No. 8228/Mum/2011, I.T.A. No. 8247/Mum/2011, I.T.A. No. 8170/Mum/2011, I.T.A. No. 8245/Mum/2011, I.T.A. No. 8231/Mum/2011, I.T.A. No. 8250/Mum/2011, I.T.A. No. 8158/Mum/2011 - - - Dated:- 22-3-2013 - R. K. Gupta(Judicial Member) And N. K. Billaiya (Accountant Member) I.T.A. No. 8238/Mum/2011, I.T.A. No. 8171/Mum/2011, I.T.A. No. 8166/Mum/2011, I.T.A. No. 8233/Mum/2011, I.T.A. No. 8246/Mum/2011, I.T.A. No. 8227/Mum/2011, I.T.A. No. 8159 8178/Mum/2011, I.T.A. No. 8168/Mum/2011, I.T.A. No. 8239/Mum/2011, I.T.A. No. 8255/Mum/2011, I.T.A. No. 8257/Mum/2011, I.T.A. No. 8236/Mum/2011, I.T.A. No. 8251/Mum/2011, I.T.A. No. 8154/Mum/2011, I.T.A. No. 8223 8225/Mum/2011, I.T.A. No. 8241/Mum/2011, I.T.A. No. 8258/Mum/2011, I.T.A. Nos.8160 8161/Mum/2011, I.T.A. No. 8155 8156/Mum/2011, I.T.A. No. 8173 8163/Mum/2011, I.T.A. No. 8157/Mum/2011, I.T.A. No. 8175/Mum/2011, I.T.A. No. 8222/Mum/2011, I.T.A. No. 8221 8242/Mum/2011, I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery or other valuable articles or things or books of account or documents seized which are belonging or belonged to the appellant and which disclosed that the appellant had incurred unaccounted expenditure. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of alleged unexplained expenditure in lands u/s.69C of the Act, ignoring the explanation of seized material and appellant s reliance on various decisions. It is prayed that the addition on account of alleged unexplained expenditure of ₹ 5252000/- may be deleted. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in bringing new evidences of Pathik Construction and Shri Sunil Gulati on record and discussing the same in the appellate order even though the same has no connection with the facts of the appellant. The learned A.O. has also made no reference of these evidences while reaching its conclusion in the assessment order. These evidences are, therefore, irrelevant and out of context so far as the appellant is concerned. It is prayed that these evidences may kindly be ignored. 5. On the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire land acquisition is looked after by Central Leadership Team (CLT) of which Shri Dilip Dherai, Shri Anand Jain, Shri Sanjay Punkhia and Mr. Ajit Warthy are key members. 4.1. Consequent to the search and seizure action, the AO issued and served notice u/s. 153C of the Act requiring the assessee to file return of income. The assessee vide letter dt. 15.9.2010 submitted to treat the return of income filed on 7.8.2008 as the return of income filed in response to the notice u/s. 153C. Thus assessment proceedings were started, questionnaire were issued and served on the assessee. The assessee explained its nature of business and filed necessary details pertaining to its business including statement of accounts. Thereafter, the AO went on to discuss the statements of Shri Anand Jain, Shri Surendra Varma and Shri Prakash Chandra Shukla recorded u/s. 131 of the Act. The AO sought clarification from the assessee in respect of certain cash payments made in connection with the land deals. This query was based on certain seized papers found from the residential premises of Shri Dilip Dherai. Thereafter, the AO went on to discuss page Nos. 22 and 23 of loose paper folder marked as An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in cash only. 4.3 The AO finally concluded at para14 pg 58 of his order as under : Having regard to the above discussion, it is clear that the assessee s submissions and submissions made by Shri Dilip Dherai are not tenable and thus the same are rejected. Plethora of incriminating evidences gathered during the search/survey from various premises of the Group and the preponderance of probability are clearly against the assessee. Plethora of incriminating evidences gathered during the search/survey from various premises of the group and the preponderance of probability clearly establish that unaccounted cash payments have been made in the above land deals. Accordingly, the above mentioned total unaccounted cash payments of consisting of ₹ 38.4518 crores mentioned on page Nos. 22 and 23 + other amounts (approx. ₹ 4 crores added from other pages discussed above) are held as unexplained expenditure in the hands of the above mentioned OSEZ land companies which include the assessee also, within the meaning of provisions of Sec. 69C of the Act. This total amount of unexplained expenditure consist of ₹ 38.4518 crores as noted on page Nos. 22 and 23 seized from re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erai seems to be made under pressure which is not corroborated by any independent evidence to disprove that cash payments were not made to the land owners. 7. The Ld. CIT(A) finally concluded that since the appellant has failed to submit any documentary evidence to rebut the entries of seized papers and statement recorded during the course of search of Shri Dilip Dherai, the addition made by the AO at ₹ 52,50,000/- u/s. 69C of the Act is upheld. 8. Aggrieved by this findings of the Ld. CIT(A), the assessee is before us. 9. The Ld. Senior Counsel vehemently questioned the validity of the order u/s. 153C of the Act. The Ld. Counsel challenged the very basis of the satisfaction note. It is the say of the Ld. Sr. Counsel that the AO has relied upon four documents which are exhibited at pages 17, 19, 20, 16, 42 43 of the Paper book , when none of these documents have been found from the possession of the assessee, these documents have been found from the possession of either Shri Dilip Dherai or M/s. Jai Corp Ltd. These documents are either in the handwriting or addressed by, or addressed to Shri Dilip Dherai or other person and not by assessee or any office Director. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .45 crore is based on Pg Nos.22 23 of Annexure A-1 and ₹ 5.02 crore is based on other seized documents. 3. While analyzing the contents of Pg. No. 22 23, the A.O. has relied on Q No. 24 of statement of Dilip Dherai recorded on date of search i.e. 05.03.2009. However, the same has been retracted through an Affidavit dated and notarized on 07.03.2009 i.e. immediately after the search. It was submitted before the Income Tax Dept. on 14.05.2009 as Mr. Dilip Dherai was in great tension due to the massive search and seizure action. The contention of the lower authorities that it is after thought is thus without any merit as it has been notarized immediately after search. 4. As regards Pg Nos.22-23 of Annexure A seized from the residence of Shri Dilip Dherai, an explanation was offered to the A.O. as well as to the Ld.CIT(A) that these documents reflect total registered area, payment amounts and future requirements for amount for purchase of land. These sheets have been prepared on 28.11.2008. These sheets were in connection with land acquired till 20.11.2008, as indicated in Column 3 of Pgs 22-23. This sheet also incorporates budgeted requirement for land which has been r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material, referred to above, as per Annexure A-1. Again these documents do not indicate the names address of the recipients of amounts. The contents of the seized material were duly explained during assessment proceedings as well as before the Ld. CIT(A). Thus, even this addition is also not based on the fact that there is no mention of name address of the recipients. The appellant as well as other associate companies have engaged in the purchase of land and during such activities, a number of rough notings were made by staff members, brokers! agents etc. However, as already stated, the documents do not reveal anything which prove that the appellant has incurred any cash expenditure to the tune of ₹ 5.O1 crore as alleged by the A.O. 7. The appellant placed reliance on the following decisions wherein the courts have held that in the absence of corroborative evidences, additions on the basis of slips, loose sheets cannot be upheld. (i) The ITAT Delhi Bench C in Third Member s decision in the case of Amarjit Singh Bakshi (HUF) v. ACIT 263 ITR 75, 81 TTJ 169 while deliberating on the loose sheets of paper held that there is no documentary evidence to support the pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by AO is of no legal consequence vis-a-vis the issue of notice u/s 153C of I.T.Act and it cannot be assailed to invalidate the proceedings u/s 153C as AC being the same - it is NOT required. 2. The judgement of Hon ble Delhi High Court in S.S.P. Aviation 346 ITR 177 (Del) also makes it very clear that at the time of recording satisfaction only prima fade grounds have to be mentioned and NOT that there is conclusive evidence with AC at this stage of unrecorded income etc. - which is not required at all. 3. Further, the judgement of Hon ble Kerala High Court in the case of Dr. K.M. Mehaboob Vs. Dy.CIT, Circle 2(1), Kozhikode (2012) 26 Taxmann.com 54(Ker.) is very clear on this and it states that u/s 153C -unlike Section 158BD - there is no need whether seized evidence etc. represents or proves undisclosed income of another assessee - and all that is required to be considered is whether such materials or evidence RELATES to another assessee or not - which may or may not lead to an assessment against that other person. Here too, the Hon ble Kerala High Court has used the word relates interchangeably with the word belong - and this should be taken note of by the Hon ble Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the intention of achieving the above. Any interpretation which fails in the above should be eschewed and the interpretation that achieves it should be preferred. III. The decision of Hon ble Gujarat High Court in the case of Vijaybhai N. Chandrani V. ACIT 333 ITR 436 - relied upon by the Ld. Counsel for the appellant - clearly states that Held, allowing the petition, that admittedly, the three loose papers recovered during the search proceedings did not belong to the petitioner. It was not the case of the Revenue that the three documents were in the handwriting of the petitioner - in the circumstances, when the condition precedent for issuance of notice was not fulfilled action taken u/s 153C of the Act stood vitiated. The above case stands distinguished on facts - because in the present case Revenue has always stated - contended and affirmed that the loose papers are signed by Mr. Dilip Dhenia and are in his handwriting hence as per observations of Hon ble Supreme Court in the case of Padma Sundar Rao 255 ITR 143 (SC) - even a small difference in our fact will make a world of difference - to the conclusion - hence this difference in facts - should make the conclusion di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Andhra Pradesh High Court in the case of Gopal Lal Bhadruka Vs. DCIT (2012) 346 ITR 106 (AP) also helps the Revenue - as it clearly states that u/s 153A and 153C - AO can take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee. It shows that the satisfaction note is not the end all and AO can take action u/s. 153C based upon other materials also as connected with the search proceedings. Also, Hon ble Delhi High Court in the case of CIT-VII Vs. Chetan Das Lachman Das (2012) 211 Taxmann 61 (Del) 254 CTR 392 (Del) has also clearly held that seized material can also be relied upon to draw inference that there can be similar transactions throughout the period of six years covered by Section 153A. Hence, the above judgement also supports Revenue s position that the assessment need not be based only and purely on seized material but also on other relevant and attendant evidences - hence the word belongs to must be read and understood accordingly - permitting the above. Hence, a harmonious interpretation is needed. VII. Lastly, reliance on the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer 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 section 153A :] [Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to 97[subsection (1) of section 153A shall be construed as reference to 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.] [(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the aforesaid distinction and the provisions of Sec. 153C all that has to be seen is whether the document seized from the possession of Shri Dilip Dherai belong to the assessee and whether on the strength of these documents has the AO recorded the satisfaction in consonance with the letter and spirit of the provisions of the Act. A careful perusal of the documents marked as page 1 2 of our order show that there is not a single mention of any company. It appears that the AO was in possession with the mythological power of the Divyadrishti possessed by Sarathi Sanjay in Mahabharat by which he could foresee and narrate the exact happenings at the Kurushetra sitting in the room of King Dridharashtra. Our reference to this mythological character is not without any basis because just by looking at the documents at page 1 2, the AO could foresee that these lands belong to 52 land companies without even knowing their names at the time of recording the satisfaction. Even in the satisfaction note while concluding his discussion at para 1.6 the AO concluded as under In view of the above, I am satisfied that the above mentioned seized documents belong to a person i.e. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.] 26[(2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of subsection (1) of section 132A, had been found in the possession or control of that person in the course of a search under section 132.] 15. It is the say of the Ld. DR that in the light of the decision of Kerala High Court 333 ITR 281 when the AO of the person searched u/s. 153A is the same as for the other person covered u/s. 153C. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose papers recovered during the search proceedings did not belong to the petitioner. It was not the case of the Revenue that the 3 documents were in the handwriting of the petitioners. In the circumstances, when the condition precedent for issuance of notice was not fulfilled, action taken u/s. 153C of the Act stood vitiated. The Hon ble High Court in its order considering the usage of a document has made the following observations: A perusal of the said documents indicates that the same contain details of members of Samutkarsh Co-Operative Hsg. Soc. The said document undoubtedly is not a document which belongs to the petitioner though there is a reference to the petitioner in one of the loose papers under the heading Samutkarsh Members. Detail indicating plot numbers, names of members and other details. 17. We find that in this decision of the Hon ble Gujarat High Court, even when impugned documents had reference to the assessee, the Hon ble High Court quashed the proceedings u/s. 153C of the Act. In our case, there is not even a reference to the assessee except the name of the village in which the assessee has purchased the lands. Coming back to the provisions of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis to assume/presume/surmise that the name of the companies are mentioned in the impugned documents. The very foundation of Sec. 153C has been shaken by not fulfilling the condition precedent for the issue of notice. It is the say of the Ld DR that in the present case there is no need for recording of the satisfaction .If this plea of the DR is accepted then the legislative intent of inserting sec.153C in the Act would get defeated because the AO will get unstoppable powers to reopen assessments for 6 years in the case of the Other Person without recording any basis [ satisfaction ] for his action .Therefore this plea of the Ld DR cannot be accepted . 19. Considering the entire facts and circumstances in the light of the impugned seized documents, we have no hesitation to hold that action taken u/s. 153C of the Act is bad in law. 20. Now coming on to the merits of the case, which is without prejudice to our findings hereinabove, the submissions of the Ld. Sr. Counsel have been incorporated hereinabove to which the Ld. DR in addition to his oral arguments filed a written submission. The Ld. DR has mainly relied upon the findings of the AO. So far as payments outside the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the group. The Ld. DR in his written submission has tried to explain the nature of transaction recorded in the seized documents 101 to 108. 21. We have considered the rival submissions on merits and perused the orders of the lower authorities. The entire assessment revolves around the statement of Shri Dilip Dherai recorded u/s. 132(4) of the Act on the date of search i.e. 5.3.2009. The relevant question which has been relied upon by the AO and the Ld. CIT(A) is as under: Q. 24.Please note page No. 22 and page No. 23 which is kept before you. As I understand these are the statement as on 28th November, 2008 for the land purchased herein list of accounted payments are provided against each village. Please clarify the same.? Ans. These documents reflect total amounts disbursed for purchase of land. The details of area, village, payments made through cheque alongwith payments made through cash is shown very clearly in the chart. The highlighted portion reflects the cash payments disbursed through Jaicorp Office at Maker and Jai Towers. The same has been mentioned separately. The cash payment from Maker adds upto ₹ 28.01 Cr and cash payment from Jai Towers adds upt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been reached merely on the entries found on loose sheet of papers for which Shri Dilip Dherai has stated that they are only estimats / budgetary figures. However, the allegations made by the lower authorities are not supported by actual cash passing hands. The entire additions are based on the seized documents and no other material has been adverted to and which could conclusively show that the huge amount of the magnitude mentioned in the seized documents travelled from, one side to the other. The Revenue authorities have not brought a single statement on record of the vendors of land in different villages. None of the seller has been examined to substantiate the claim of the Revenue that extra cash has actually changed hands. 24. Our view is fortified by the decision of the Delhi High Court in the case of Malik Brothers Pvt. Ltd. Vs CIT 162 Taxmann 43 which is relied upon by the Ld. DR. In that case, the assessee purchased the property allegedly for ₹ 6 lakhs. The vendor in her statement confirmed that the sale consideration of said property was ₹ 45 lakhs and paid tax thereon. In view of vendor s statement, the AO made an addition of ₹ 39 lakhs to the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
