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TMI Blog2017 (12) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Jain recorded at the time of search nor his cross-examination was provided to the assessee by both the lower authorities despite specific and repeated requests made by the assessee in this regard. We find in the present case both the Assessing Officer and the CIT (A) are looking for proof beyond doubt which is not possible and they are basing their decision on an element of suspicion. It has been held in various decisions that presumptions and surmises, however strong may be, cannot be the basis for any addition. In view of our above discussion, we are of the considered opinion the ld. CIT (A) was not justified in confirming the addition made by the Assessing Officer. Therefore, the order of the CIT (A) is set-aside and the Assessing Officer is directed to delete the addition made in the hands of Design Infrcon Pvt. Ltd. The grounds raised by the assessee are accordingly allowed. - Appeal of assessee allowed. - I.T.A .No. 3185/DEL/2015, I.T.A .No. 3186/DEL/2015 And I.T.A .No. 3253/DEL/2015 - - - Dated:- 4-10-2017 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Kapil Goel, Adv, Sh. Mukul Gupta, Adv For The Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purchase of land, and through normal banking channel, could not be subjected to the provisions of section 68 of the IT Act. 7. That on the facts and circumstances of the case and in law, the CIT (A) erred in not accepting the genuineness and authenticity of the tripartite agreement/MoU dated 29.05.2010 effected amongst M/s. Aquiss Pvt. Ltd., M/s. Attractive Finlease Pvt. Ltd. and M/s. Aasheesh Capital Services Pvt. Ltd. as first party and M/s. Design Infracon Pvt. Ltd, M/s. Delicate Realtors Pvt. Ltd and M/s. Pavitra Realcon Pvt. Ltd. as second party and Sh. Kabul Chawla as the confirming party, and the factum of the forfeiture of the amount as per the said agreement/ MoU. 8. That on the facts and circumstances of the case and in law the CIT (A) erred in holding that the sum of ₹ 120,00,00,000/- was surrendered as income in the hands of the assessee, without dealing with specific objections raised/taken before him against the alleged surrender. 9. That on the facts and circumstances of the case and in law the CIT (A) erred in concluding, to quote, all the grounds of appeal are dismissed , despite a finding given in the penultimate paragraph, to the effect, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y non-incriminating in nature as also none of the document is used in assessments while making the impugned additions. 5. That we reiterate our contentions and arguments raised in synopsis filed on last date, in support of aforesaid grounds where revenue has been heard and revenue has not factually controverted on facts assessee s contentions. 6. That we further rely on Hon ble Supreme Court ruling in case of NTPC (229 ITR 383) and old Delhi High Court ruling in 123 ITR 200. 7. That at the time of filing of appeal assessee was not having advantage of decision of jurisdiction High Court decision like Jasjit Singh which came to the knowledge of the assessee later on. This is the reasonable cause for not taking the this plea before lower authorities. (High Court order came on 11.08.2015 subsequent to the filing of appeal on 22.05.2015). ITA No. 3253/Del/2015 (A.Y. 2011-12) Delicate Realtors Pvt. Ltd. 1. That on the facts and circumstances of the case, the order passed by the Assessing Officer and confirmed by the CIT(A), is bad in law and void ab-initio on account of unlawful/illegal assumption of jurisdiction by the Assessing Officer. 2. That on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id agreement/MoU. 8. That on the facts and circumstances of the case and in law the CIT (A) erred in holding that the sum of ₹ 105,00,00,000/- was surrendered as income in the hands of the assessee, without dealing with specific objections raised/taken before him against the alleged surrender. 9. That on the facts and circumstances of the case and in law the CIT (A) erred in concluding, to quote, all the grounds of appeal are dismissed , despite a finding given in the penultimate paragraph, to the effect, that if the arbitration award is decided in favour of M/s Attractive Finlease Pvt Ltd, then the amount advanced by them would be taxable in the hands of M/s Attractive Finlease Pvt. Ltd . 10. That on the facts and circumstances of the case and in law the CIT (A) erred in not deleting the interest charged u/s 234B of the IT Act. 11. The appellant craves permission to add, amend, alter or vary all or any grounds of appeal on or before the date of hearing of the appeal. Additional Legal Ground Under Rule 11 1. That assessee has raised legal ground in appeal memo vide ground No. 1, challenging the validity of the proceedings and assumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee later on. This is the reasonable cause for not taking the/this plea before lower authorities. (High Court order came on 11.08.2015 subsequent to the filing of appeal on 22.05.2015). ITA No. 3186/Del/2015 (A.Y. 2011-12) Design Infracon Pvt. Ltd. 1. That on the facts and circumstances of the case, the orders passed by the Assessing Officer, and the CIT(A), are bad in law and void ab initio on account of violation of principles of natural justice and denial of proper and adequate opportunity of being heard. 2. That on the facts and circumstances of the case, the assessment made is bad in law for the reason that material seized u/s 132 of the IT Act from third parties (i.e. Sh. S.K.Jain and Sh.V.K.Jain) has been utilized in the assessment of the assessee without complying with the mandatory provisions of law as engrafted under the IT Act. 3. That on the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of ₹ 1,16,00,00,000/- relying on the material seized u/s 132 of the IT Act 1961 from third parties (i.e. Sh. S.K. Jain and Sh. V.K. Jain) and collected during post-search investigations made, including statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal on or before the date of hearing of the appeal. 2.1 Since the above grounds are purely legal in nature, these grounds are admitted for adjudication after hearing both the side. 3. For the sake of convenience, the facts of ITA No. 3185/Del/2015 are narrated hereunder:- A search and seizure operation u/s 132 in the case of M/s BPTP Ltd. (earlier known as M/s Business Park and Town Planners Ltd.) group of Companies was carried out at 7/12/2010 and finally concluded on 5/2/2011. Notice u/s 143 (2) of the Income-tax Act, 1961 was issued to the assessee on 13/9/2012. The assessee had filed its return of income on 30/09/2011 declaring total income at Nil. The detailed questionnaire dated 10/10/2012 was issued. In response to the said notices, the assessee s representative appeared and submitted the details and clarifications which were placed on record. The Assessing Officer observed that BPTP Group is headed by Shri Kabul Chawla, son of Shri Satish Chawla. Ownership Company of the group, M/s BPTP Ltd. was incorporated in 2003 and is a leading real estate developer in NCR region. The group is one of the major players in development of integrated township, residential project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st would be paid in due course. During the assessment proceedings, the notice u/s 143(2) was issued on 13/9/2012. The details of disclosure made by these three companies are as under:- S. No. Name of the company making disclosure Amount of disclosure made Details of taxes paid thereon 1 M/s Design Infracon Pvt. Ltd ₹ 106.60 crores Rs.6,67,33,333/- 2 M/s. Delicate Realtors Pvt. Ltd Rs.99.98 crores Rs.6,65,33,333/- 3 M/s Pavitra Realcon Pvt. Ltd ₹ 118.65 crores Rs.6,67,33,334/- Total ₹ 20 Crores 3.1 Since in the return of income the assessee-company did not declare the abovesaid disclosed income, show-cause notice in respect of credit of ₹ 116 crores into the account of the assessee-company was issued on 23/7/2012 and again on 29/1/2013. In response to the show-cause notices, on 22/2/2013, the assessee made a written submission. The Assessing Officer observed that durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framing the assessment:- (a) The appellant has filed two replies is response to show-cause letter issued by the Assessing Officer. Further opportunity was not allowed by the Assessing Officer before making addition. (b) The Assessing Officer did not call upon the assessee to produce any person. (c) The Assessing Officer has not given any opportunity to cross-examine the persons whose statement has been relied on by the Assessing Officer that the bank account of those persons were used by Jain Brothers for accommodation entries Neither their statement was given to the assessee during the assessment proceedings. (d) Annexure A-10 Seized from the premises of Jain Brothers was only shown to the Directors of the appellant s director copy of annexure A-10 was not given to the assessee. (e) Copy of statement of Jain Brothers i.e. S.K. Jain Sh. Virendra Kumar Jain was not given to the assessee. (f) The Assessing Officer has not brought any corroboration evidence while relying on the statement u/s 132(4) before making the addition. (g) The evidences that Jain Brothers are operating bogus companies were never confronted to the appellant. (h) The e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. However, the ld. CIT(A) was not satisfied with the arguments advanced by the assessee and upheld the action of the Assessing Officer by observing as under :- I have considered the entire evidences relied by the Assessing Officer the arguments of ld.AR. First I would deal with the statement of the directors recorded during the search u/s 132(4) of l.T. Act, during the search post-Search proceeding at appellant s premises. Statements of following three persons were recorded. 1. Shri Nirbhay kumar Jain 132(4) section vide which statements recorded 2. Shri Sandeep Sehgal 131 3. Shri Sanjeev Kumar. 132(4) Both person Sh. N.K. Jain Sh. Sanjeev Kumar whose statement were recorded u/s 132(4) were shown cash book seized from the premises of Sh. S.K. Jain and Sh. Virendra Jain as annexure A-10 which shows the cash was received by sh. S.K. Jain Sh. Virendra Jain from one Shri Ramprasad. When these facts were brought to the notice of these persons they declared income in the hands of three companies of BPTP group the details are as under:- S. No. Name of the company Disclosure Made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are accepting these income to avoid any penalty, litigation and prosecution and to buy peace of mind. Thus the total disclosed amount works out as under:- 1. Delicate Realtors (P) Ltd. Rs.99,98 crores 2. M/s. Pavitra Realcon (P) Ltd. Rs.118.65 crores 3. M/s. Design Infracon (P) Ltd. Rs.106.60 crores Total Rs.325.23 crores. The taxes on the above disclosed amount including interest will be paid in due course. (ii) Statement of Sh. N.K. Jain (u/s 132(4) Q. 34 I am showing you zerox copies of Annexure A-10 seized from the premises of Sh. S. K. Jain, which reflects that a set of documents in the shape of cash book. written in the handwriting of shri S. K. Jain and his brothers Shri Virender Jain reflect that one Shri Ram Parsad, who incidentally happens to be one of the employee of BPTP Group of companies and yourself who happened to be company secretary of M/s. BPTP Ltd., have given cash to Shri S. K. Jain on different dates. You are hereby s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Seized document in form of Cash book Seized from Jain Brothers were shown to them, though cash transaction were denied. It means that the disclosures of income in the hands of these three companies are related to cash book shown. Details of the findings on the content of annexure A-10 its relevance would be given subsequently. Therefore, I do not agree this argument of ld. AR that disclosed income is of four liners not based on evidence. Second arguments of ld. AR that the people who are not directors of a particular company, their statement have also been relied by the Assessing Officer. It may be mentioned that all there persons namely Sh. N.K, Jain, Sh. Sandeep Sehghal Sh. Sanjeev Kumar are employee of flagship company M/s BPTP Ltd. and are directors in different companies of BPTP group. Either of three person are directors in all the three companies. During the appellant proceedings, details of directors as on date of search of different companies were obtained from ld. AR. The same are as under:- S. No. Name of the company making disclosure Amount of disclosure made Details of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be filed by the person making such statement. Further, as discussed earlier the disclosure of undisclosed income was made apparently pursuant in subsequent question of cash transaction shown in seized annexure A- I0 found from the premises of Jain Brothers. Under these circumstances, I do not agree that retraction of statement was made by the person who has made such statement explaining the circumstances in which such statement was made. In fact, in the statement of Sh. Sanjeev Kumar has stated that we are not able to explain and support the receipt, we accept the same to be income earned during the year, which has not been provided yet in the books of current Financial Year. The alleged advance as contended by Ld. AR must have been entered in the books of account at the time of receipt of the same. It is not a new fact after recording of statement. A closed scrutiny of this statement reveals that such income which is the source of alleged cheque payment is not explainable. The said Statement was not retracted is further strengthened by the fact that these companies have made part payment of taxes on such undisclosed income. In view of the above facts, I do not agree that it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up inform of a letter issued by BPTP stating that Sh. Ramprasad is an employee of M/s. BPTP Ltd. and has been given accommodation at 7, Barakhamba Road. Secondly, mobile No. of Sh. Ramprasad was obtained during the search at the premises of BPTP as 9871262713 and call details were obtained in respect of mobile No. 98917-09895 belonging to Sh. Surendra Kumar Jain which shows that there is frequent conversation between Sh. Surendra Kumar Jain and Sh. Ramprasad on the date of receipt of cash from Sh. Ramprasad. The very fact that Surendra Kumar Jain was calling Sh. Ramprasad, employee of BPTP Ltd. and on the same date cash is received by Sh. Surendra Kumar Jain as per the seized document proves that Ramprasad mentioned in the seized document of Jain Brothers is employee of BPTP Ltd. Further name of Sh. N.K. Jain, another employee/company secretary of BPTP Ltd. is also appearing in seized material in Annexure A-II where he is shown as mediator for the transaction which proves that the cash payment and obtaining cheque from Jain Brothers was arranged by Sh. Ramprasad and Sh. N.K. Jain of BPTP group. In view of these evidences brought on record, I do not think there is any conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of Sh. S.K. Jain and Sh. Virendra Jain was given for e- transaction in the bank accounts of these dummy concerns. * Letter of authority in respect of all these concerns are in favour of Sh. Surendra Kumar Jain to be appear before Income Tax Authority found in the computer of Jain Brothers. Considering the entire facts and circumstances of the case Sh. Surendra Kumar Jain and Sh. Virendra Jain was assessed u/s 153A/143(3) as entry operators where commission income was assessed for seven assessment year from 2005- 06 to 2011-12. I have decided the appeal in both the cases u/s 250(6) in appeal No. 222-228/13-14/1373-1379 and appeal No. 229-235/13-14/1380-1386 in the case of Sh. Virendra Jain and Sh. Surendra Kumar Jain where I have held that these two Jain Brothers are receiving cash from the beneficiaries and by utilizing its bogus/paper concern/company by rotating the fund through various layers gives cheques to beneficiaries after charging commission. I have confirmed the addition on account total cash received as per the seized document u/s 68 as these persons have not explained the source and not given the name of beneficiary to whom such cash belongs inspite of nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usive, the Assessing Officer need not conduct further enquiry. (v) The Assessing Officer has not examined Sh. Ramprasad and no cross-examination was offered to the appellant. In my view where documentary evidences in support of cash received from Sh. Ram Prasad was seized and corroborative evidence was found that Sh. Ram Prasad is an employee of BPTP group and BPTP group has received cheque/P.O. of equivalent amount from Jain Brothers, examination of sh. Ram Prasad was not required as enough evidences are there to prove the facts. (vi) The evidences that Jain Brothers are operating bogus companies to provide accommodation entries were never confronted to the appellant during the assessment proceedings. In this regard, I have perused the show cause letter issued by the Assessing Officer dt.29.01.2013 which is part of the paper book page 79-83. In the said show cause entire flow of fund leading to issuance of payment made to Delicate, Design Pavitra (three companies of BPTP name in short) are mentioned. In the said show cause, it is clearly mentioned that cash book seized from the premise of Jain Brothers shows that they are charging commission for converting cash into ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Services Pvt. Ltd to M/s Aquiss, Aashish Attractive. These enquiries have been dealt in details in earlier parts of the order. (d) Now, I would discuss the claim of MoU dt.21.5.2010 that the amount receive by 3 companies of BPTP group, namely, Design, Delicate Pavitra (name in short) from three companies of Jain Brothers namely, Ashish, Aquiss Attractive was on account of execution of said MoU signed by these six companies with confirming party as Kabul Chawla for the transfer of land at Hyderabad. All the money received by these three companies of BPTP group namely, Design, Delicate and Pavitra has been forfeited on the ground of non-compliance of terms by the alleged purchase of land through MoU namely, Aquiss, Aashish Attractive. The said forfeited amount was not declared by M/s. Design, Delicate Pavitra on the ground that other parties namely, Aashish, Aquiss and Attractive have filed arbitration suit against the forfeiture of the sum before a retired High Court judge namely, Sh. S.K. Mahajan. The arbitration process is continuing and yet to be finalized. Therefore, the said sum was not declared as income during the year. The ld. AR has relied on various judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged MoU signed. This cash paid to Jain Brothers are the income of BPTP group and has to be taxed at the first layer of BPTP group of companies as income in form of cash which can reasonably be assumed belonging to these companies. In present case, first layer of companies of BPTP group are M/s. Design, Delicate and Pavitra who have received money from Jain group of companies which are fictitious/paper and used only to provide entries. It may be mentioned here that once, the amount received from M/s. Aquiss, Aashish Attractive is held to be on account of cash payment to Jain Brothers, the source of amount through bank account remained unexplained. Therefore, section 68 applies on account of non-genuineness of the transaction/creditworthiness of these paper companies. Even otherwise the cash receipts by Jain Brothers from BPTP group are nothing but income of BPTP group which have to be taxed. The most suitable answer is the first recipient of BPTP group in whose hand such receipt is taxable which was disclosed u/s 132(4)/131 of the Act by the directors of the company. Accordingly, additions in the hands of M/s. Design Infracon Pvt. Ltd, M/s Delicate Realtors Pvt. Ltd and M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um not on the nature money involved. In any case, arbitration process is subsequent phenomenon which will not change the character of transaction. Therefore, this argument does not change my finding based on evidences discussed earlier. The argument of ld. AR that the mere filing of arbitration by M/s Aquiss, Aashish Attractive proves that the fund belongs to them. I have examined this argument. If it is proved that these three companies namely Aashish, Aquiss Attractive are controlled effectively by Gurinderjit Singh Group and the award becomes final that M/s Design, Delicate Pavitra have to return the money received the award is finally implemented. In that case it would be taxable in the hands of M/s Aquiss, Aashish Attractive. Lastly. in the statement of facts filed along with appeal form No. 35. it is claimed that the order approval of Addl. CIT as mentioned in the assessment order is updated. I have verified the assessment records, the order date is 28.03.2013 approval of Addl. CIT is also dt.28.03.2013. This fact is further proved by the date mentioned in demand notice u/s 156 dt.28.03.2013 which has been enclosed along with form No.35. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings that invocation of section 153C of the Act requires not only recording of satisfaction note but same must be based on incriminating material giving rise to undisclosed income for the period under consideration. The ld. AR further submits that in present case, it is undisputed fact that no addition whatsoever was made on basis of material referred to in satisfaction note. In other words, once satisfaction note itself does not give rise to any incriminating material containing any undisclosed income, invocation of section 153C for the period under consideration could not have been made. The Ld. AR further submits that once it is accepted fact that no assessment was carried out for any of the period referred to in satisfaction note, the assessment u/s 143(3) also fails because same is in consequence to reopening u/s 153C. Thus, the ld. AR submitted that it is well settled law that jurisdiction u/s 153C comes from satisfaction note which cannot be allowed to be improved, modified or altered, i.e. any infirmity in satisfaction note would be non-curable. 6. In respect of the Merits of the case, the ld. AR submits for all the three appeals that arbitration proceedings were going o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32(4). Show-cause notice given by AO was duly replied on 7.2.2013 and 22.2.2013 to AO. The ld. AR further submits that the Assessee, during the course of survey on 30.5.2011 duly explained the reasons to DDIT who conducted search also about disclosure of income during search and latest position of disclosure. The ld. AR further submitted that the receipt of amount against proposed transaction of sale cannot be taxed u/s 68 of Income Tax Act. The ld. AR further submitted that provisions of Section 68 of Income Tax Act are not applicable in the present case as identity of entity (Aquiss) who paid the money to assessee was beyond doubt since the entity was assessed to tax with same Assessing Officer. Entity (Aquiss) who paid money to assessee was assessed to tax was traceable, was complying with provisions of law and was regularly appearing before the same AO with whom assessee is assessed to tax. Aquiss is regularly filing Tax returns and RoC returns as the data is available on MCA portal. As regards the genuineness of transaction of the assessee with the Aquiss, the existing assessee (Aquiss) assessed to Tax with same AO with whom assessee is assessed to tax. The assessee filed conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AR further submits that there was no corroboration of seized records found during the course of search which was used against the assessee. The ld. AR relied upon certain decisions. The ld. AR further submits that the seized records if any found during the course of search on S.K. Jain and Virender Jain cannot be used against the assessee as no procedure as explained u/s 153-C was followed by the AO. The ld. AR relied on the decision of Hon ble Jurisdictional Delhi High court in case of Pepsi Foods (P.) Ltd. v. Asstt. CIT [2014] 52 taxmann.com 220, Pepsico India Holding (P.) Ltd. v. Asstt. CIT [2015] 370 ITR and Hon ble Allahabad High court decision in case of CIT v. Gopi Apartments [2014] 365 ITR 411. The ld. AR further submitted that there was no accrual of income to assessee. As against forfeiture of amount received by assessee from Aquiss, claim is pending before Arbitration, the amount forfeited does not give rise to accrual of income in the hands of assessee. Reliance is placed on the decision of Supreme court in case of CIT v. Excel Inds. Ltd. [2013] 379/358 ITR 295 and Godhra Electricity Co. Ltd. v. CIT [1997] 225 ITR 746. Relying on various decisions, the ld. AR submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er person to the AO of such other person. It has been held by numerous court pronouncements that after receiving such material issuing of the Notice u/s 153A r.w.s 153C is automatic and no satisfaction is required for the same). The reliance is placed on the ratio of judgment of Hon ble jurisdictional High Court in case of CIT v. Anil Kumar Bhatia [2013] 352 ITR 493 (Delhi). The ld. DR drew the attention of the Bench to the relevant portion of the judgment which reads as under- A perusal of Section 153A shows that it starts with a non-obstante clause relating to normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. These Sections, the applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIV-B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as block assessment because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tand of the assessee is different (rather contrary) than the one taken at appellate stage. Therefore, such (new) ground cannot be allowed to be raised but for asking for exercise of discretion of the ITAT. However, there is no such request/application. Even if such request/application was made, the same is liable to be rejected as (i) there is no good reason for the delay, and (ii) the law on this point has been settled by Hon ble SC that if the relevant facts are not before the Appellate Authority, the law point cannot be raised. In this case relevant facts would come out only after detailed scrutiny of Assessment/search records. The reliance in placed upon ratio of judgment of Hon ble SC in case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) as explained while delivering the judgment in case of Goetze India Ltd. v. CIT [2006] 284 ITR 323/157 Taxman 1. During the appellate proceedings, the appellate authority is also required to do justice to the revenue which represent interest of society at large. It is therefore, necessary that conduct of assessee has to be honest. Therefore, assessee ought to have pointed out/taken objection to technical defects at the earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned, the ld. DR submits that during search and post-search enquiries, in case of BPTP group, there was no warrant u/s 132 against these companies, these were companies running from addresses belonging to BPTP group and employees of BPTP group are directors. The ld. DR further submits that in case of BPTP, overwhelming incriminating material was seized/gathered which indicated unaccounted cash transactions. In various assesees belonging to the BPTP group, various additions have been confirmed upto ITAT stage. Special mention is to the modus operandi of issuing of post-dated cheques (PDCs) against purchase of Land and extension of validity of these PDCs payment of unaccounted cash. Specific Case of ACIT v. IAG Promoters Developers (P.) Ltd. dated 31.10,2014 {ITA No. 1674/Del/2011 AY 2008-09}. Employees of the BPTP group ( Shri Ram Prasad and N K Jain. Shri N K Jain is Director in M/s Design Infracon Pvt. Ltd.) were paying cash to obtain cheques from accommodation entry providers (Surendra Jain/Virendra Jain who are known for running racket of money laundering and have been arrested by Enforcement Directorate for such activities). There are cases decided by Settlement Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by these assessee companies and colour has been provided by creating evidences on paper in form of recording of accounting entries there is very heavy onus upon assessee to show identity and capacity of the persons providing this money and genuineness of these transactions. The Ld. DR relied upon the judgment of the Hon ble Supreme Court in case of CIT v. Durga Prasad More [1971] 82 ITR 540 (SC). The ld. DR also relied upon the order of the Hon ble Delhi HC in case of CIT v. Nova Promoters Finlease (P.) Ltd. 342 ITR 169 (Delhi). The ld. DR submits that Directors of these companies could not explain these transactions and logically admitted this to be undisclosed income by way of statements under oath including statement u/s 132(4). These statements were taken at different places ,by different officers and at different time (there was a gap of more than a month). These statements were never retracted or proved to be wrong. These were ignored in RsOI. The retraction made by the Assessee two years after the declaration was not bona fide. There was no satisfactory explanation for not including the said amount in the return of income. Reversed ITAT Order and the ratio of decision in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not applicable simply because new and old schemes are way apart in concept. For example, the judgment of the Hon ble Delhi HC in case of Harjeev Aggrawal. In any case this judgment is in peculiar facts of that case where issue was whether the statement in that particular case there were other contradictory evidences) would triggers Block assessment. After Hon ble Delhi HC confirming additions u/s 153A based upon statement in case of Smt. Dayawanti v. CIT 390 ITR 496 (Delhi), the order dated 31.05.2016 of ITAT in case of Best Infrastructure (India) (P.) Ltd. v. Asstt. CIT ITA No. 1698-1701/Del/2014 cannot help the case of the assessee. Since, there is no bar to the AO when to issue notice u/s 143(2) before date of limitation which in this case was in Sept, 2012. Imagine a situation, if notice u/s 143(2) was issued before date of handing over of the material (say in June, 2012). If we go by the proposition of AR, in that case there would have been abetment of normal proceedings and 153C proceedings would start which will have no limitation. It will not impose any limitation on the powers of the AO to make addition. Obvious answer is no . If we put another question- whether asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said at this stage and on prima facie considerations that the lower authority s order is bad prima facie for the reason of denial of cross-examination. Detailed arguments will have to be heard in this context whether in the facts of this case denial of cross- examination was called for taking into consideration the totality of the evidence on record.... Principle of natural justice is a flexible concept. The idea is that assessee to be confronted with adverse material. Ref. is invited to para 6.4 of the order dated 31.12.2010 passed by ITAT in case of Hersh W. Chadha v. Dy. CIT [2011] 43 SOT 544 (Delhi) - relevant portion is reproduced as under: ....All that is required is that if they want to use any material collected by them which is adverse to the assessee, then the assessee must be given a chance to make his submissions thereon. The principles of natural justice are violated if an adverse order is made on an assessee on the basis of the material not brought to his notice... The reading of the assessment order shows that there is no withholding the material. Therefore principles of natural justice have been followed. 13. The Ld. DR submitted that the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by authority of tax. The stand of revenue is that what AO did was under authority of Law, only. It is correct law position that if provisions of normal scrutiny are otherwise applicable, these would be disabled only in cases of abatement of these proceedings as provided under section 153A/153C. The case of assessee is not of abatement. In any case if the proceedings are abated, scope of 153A/153C would be unrestricted (and wider than in case of applicability of normal provisions). In other words because of search or passing of seized material belonging to the AO of other person , the scope of scrutiny under normal provisions can only be widened, it cannot be restricted or curtailed. The judgment of Hon ble SC in case of P.G. W. Sawoo Pvt. Ltd. (supra) does not help the cause of assesee. The court held that right to receive arose only in the year 1994 and not from any earlier date. There are so much circumstantial evidences indicating that there are preponderance of probabilities that it is an after-thought including the land being under legal dispute before Hon ble Supreme Court and none of the assessee companies being owner of the land. According to the assesee, it has right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.07.2012 Dy. Commissioner of Income Tax Central Circle-23, New Delhi 15.2 Similarly, we find in the case of Pavitra Realcon Pvt. Ltd. the Assessing Officer has recorded the following satisfaction note :- In view of above, it is established beyond doubt that many books of account or documents seized during the course of search and seizure action on BBTP group of cases belong to M/s Pavitra Realcon Pvt. Ltd. i.e. the assessee company and hence prerequisite condition to initiate proceedings u/s 153C of the Income-tax Act, 1961, is fulfilled. Therefore, I am satisfied that case of M/s Pavitra Realcon Pvt. Ltd. is a fit case for initiation of proceedings u/s 153C of the Income-tax Act, 1961. Accordingly, notices u/s 153C r/w 153A of the Income Tax Act, 1961 are issued for AY 2005-06 to 2010-11, in the case of M/s Pavitra Realcon Pvt. Ltd. i.e. the assessee company. Sd/- (Dr. Anjula Jain) 27.07.2012 Dy. Commissioner of Income Tax Central Circle-23, New Delhi. 15.3 Since the satisfaction was recorded on 27th July, 2012, therefore, deemed date of search in the case of other person for computing the period of six years is 27th July, 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as per provisions of 153A. The intention of the parliament for separate Sections for issuing notice u/s 143(2) and Section 153A is specifically different and falls in particular circumstances mentioned in those particular Sections. It cannot be interlocated or inter related. Clearly, here the Assessing Officer was prima facie of the opinion that there was a search in the premises of BPTP Group. But instead of the searched material whether belong to the assessee or not which is in doubt cannot be simply taken in proceedings u/s 143(2) by the Assessing Officer. The Assessing Officer cannot take the benefit of both the Sections. It has to be specifically mentioned in the assessment order why he is invoking that particular Section because each Section has its own procedure and if there is a procedure which has to be followed the same cannot be ignored by the Assessing Officer. All the Sections to Income tax Act has given its own formats and whenever necessary they have given specific Sections in that particular Section and why the other Section has to be taken in cognizance while interpreting that particular Section. Thus, the legal ground of the assessee that Assessing Officer as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no notice u/s 153C has been issued for the period under consideration. Since the assessment order has not been passed in conformity with the provisions of the law, the same is liable to be quashed since such assessment is palpably and patently illegal. 18. Now coming to the nature of addition is concerned, we find that in the case of M/s Delicate Real Estate Pvt. Ltd. and M/s Pavitra Realcon Pvt. Ltd., no addition has been made on the basis of any incriminating material found/seized during the course of search. We find the Hon ble Delhi High Court in the case of RRJ Securities Ltd. (supra) has held as under :- 35. The AO of the person other than the one searched also, is not, at the stage of issuing notice under Section 153C/153A of the Act, required to conclude that the assets/documents handed over to him by the AO of the searched person represent or indicate any undisclosed income of the Assessee under his jurisdiction. As explained in SSP Aviation (supra), Section 153C only enables the AO of a person other than the one searched, to investigate into the documents seized and/or the assets seized and ascertain that the same do not reflect any undisclosed income of the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r,it is so contemplated in such substantive provision, then this defence is not open that it may be treated as a mere mistake of wrong provision of the statute. Notice was specifically served under Section 153A. Assessment order clearly says that it is being passed under Section 153A. Moreover, jurisdiction for making assessment under Section 153A read with Section 153C apparently is quite different than requirement of notice under Section 143(2) of Act, 1961 and assessment made under Section 143(3). 17. We find that this aspect has also been discussed by Tribunal and it has observed as under: 16 .. The provisions of section 153A read with section 153C empower the AO to proceed with the assessment in search cases mentioned therein meaning thereby that the AO gets jurisdiction to proceed for making assessment in search cases covered by these provisions, whereas provisions of section 143(2) subject to limitation provided under proviso to the sub-section require the AO to give the assessee an opportunity to support its return, before making of assessment under section 143(3)/144 as the case may be. In other words jurisdiction to make assessment under section 143(3) is gath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f decisions relied on by ld. counsel for the assessee has held that additions cannot be made in proceedings u/s 153C in absence of any incriminating material. Reference may be made to the decision in the case of Pr. CIT v. Meeta Gutgutia [2017] 395 ITR 526 (Delhi). 21. Further, while writing the order it has come to our notice that the Hon ble Apex Court in the case of CIT v. Sinhagad Technical Education Society [2017] 84 taxmann.com 290 has held that section 153C can be invoked only when incriminating materials assessment year-wise are recorded in satisfaction note which is missing here. Therefore, the proceedings drawn u/s 143(3) as against 153C are invalid for want of any incriminating material found for the impugned assessment year. 22. In view of the above, the additional grounds raised by the assessee in the case of M/s Pavitra Realcon Pvt. Ltd. and M/s Delicate Real Estate Pvt. Ltd. are accepted. Since the assessee succeeds on this legal ground, we refrain ourselves from adjudicating the issue on merit as far as these two cases are concerned. 23. Now, coming to Design Infracon (P) Ltd., we find from the material available on record that there is brazen violation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record nor the said documents are independently corroborated. This is more so when assessee s extensive search operation has not yielded any incriminating material. The provisions of section 292C creates presumption only to the person from whose possession the said documents are found and therefore, the same will not be applicable qua the assessee. 25. As far as the statements u/s 132(4) are concerned, which are heavily relied on by the ld. DR, we find the same are bereft of any admission of any undisclosed income on the basis of any incriminating material found from the assessee s own search. There is no corroboration of the statement recorded u/s 132(4) by any independent corroborative material. The above view of ours find support from the decision of the Co-ordinate Bench of the Tribunal in the case of Best City Infrastructure Ltd. (supra). The relevant observations of the Tribunal at para 11-12 read as under:- 11. In the case of Harjeeg Aggarwal (supra), Hon ble Jurisdictional High Court considered the evidentiary value of the statement recorded during the course of search. The relevant portion is paragraph 19, 20 24, which are reproduced below for ready reference :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion was made by the assessee during search operation. In paragraph 24, their Lordships have mentioned about the prevailing practice of extracting statement by exerting undue influence or coercion by the search party. Though the above decision in the case of Harjeev Aggarwal is with reference to the meaning of undisclosed income u/s 158BB of the Income-tax Act, However, in our opinion, the above observation of Hon ble Jurisdictional High Court would be squarely applicable while considering the evidentiary value of the statement while making the assessment u/s 153A. 26. As mentioned earlier the above decision of the Co-ordinate Bench of the Tribunal has been upheld by the Hon ble Delhi High Court in 397 ITR 82. 27. Further, we are of the opinion that since arbitration proceedings are still going on therefore, there is no accrual of income pending litigation so as to bring the amount to tax. We find the Hon ble Supreme Court in the case of P. G. W. Sawoo (P.) Ltd. (supra) has observed as under (short notes) :- Premises belonging to the assessee were let to the Government of India. The rent for the premises was enhanced from ₹ 4 to 8.11 per sq.ft. per month effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served as under :- The question whether a Hindu undivided family is doing business in shares is a question of fact : but if the court of fact whose decision on a question of fact is final, arrives at the decision by considering material which is irrelevant to the inquiry, or by considering material which is partly relevant and partly irrelevant, or bases its decision partly on conjectures, surmises and suspicions, and partly on evidence, then in such a situation clearly an issue of law arises. When a court of fact acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises. 30. Similarly, the Apex Court in the case of Daulat Ram Rawatmull (supra) has observed as under :- The onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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