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TMI Blog2017 (6) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of these shops purchased. However, the Assessing Officer presumed that the assessee had accepted on money and applied the rate of on money on transaction for A.Y. 2006-07. We do not find infirmity in the order of CIT(A) for deleting the said addition, since the findings recorded by CIT(A) are as per material on record and the same has not been controverted by revenue by bringing any positive material on record. The CIT(A) has also correctly applied the judicial pronouncements laid down in the case of Royal Marwar [ 2007 (12) TMI 321 - ITAT AHMEDABAD] to the facts of the instant case. Accordingly addition made by AO on account of on-money has been correctly deleted by CIT(A) after recording detailed finding which is as per materials on record. Since no addition has been made based on these documents but the addition is solely based on page no 5 of the Annexure A - 1 impounded during the course of survey at the assessee s premises, thus, the documents i.e. page no 1 to 27 of Annexure A - 1 found in course of search cannot be termed as incriminating material as envisaged u/s. 153C. Moreover there was no year specific incriminating material available with the learned Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the assessee s premises surveyed. However, no undisclosed cash, investments, expenditure, etc. had been found either in the course of search and survey proceedings in relation to the assessee. It may be appreciated that if infact there was such a huge receipt of on- money as alleged by the revenue, then the revenue should have been able to corroborate it with evidences in the form of undisclosed cash, investment or expenditure. The fact that no such evidences were available as regard to undisclosed cash, expenses or investment infact also substantiates the claim of the assessee that no on-money was received by it. Notwithstanding the above observation, since the survey party has found that the assessee was not able to substantiate fully with corroborative evidences that the amount of 8,90,000/- was not received in cash addition of 8,90,000 is warranted. However, since the assessee had already offered a sum of 1 crore to cover any discrepancies whatsoever no separate addition is warranted. The onus of the assessee stands discharged and shifts to the learned Assessing Officer. Provisions of section 132(4A) or 292C of the Act speaks about the presumption of the content in the seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered for surrender of tenancy rights under the law governing the surrender of tenancy rights. (c) The learned CIT (Appeals) erred in law and fact in appreciating that document executed between the landlord and a third party, to which appellant was not a party, could not be made a basis for estimating sale consideration on surrender of tenancy rights and for which no consideration was actually received or found to be received by the appellant. 2. Your appellant prays that (a) The said addition of ₹ 7,71,000/- on account of alleged capital gains on surrender of tenancy rights be deleted. (b) such other relief as may be deemed fit be granted. 3. The appellant craves leave to add, amend, alter or delete any or all grounds of appeal. 3. The grounds taken by Revenue in A.Y. 2006-07 are as under:- I. In the facts and circumstances of the law the Ld.CIT(A) erred in deleting the additions amounting to ₹ 2,91,29,314/- on account of unexplained sales. II. In the facts and circumstances of the law the Ld.CIT(A) erred in not accepting the fact that there was an unaccounted sale pertain to AY.2006-07 which was established during the assessment proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and avoid penal consequences. 6. During the course of scrutiny assessmen, inspite of one crore having offfered in addition to the regular business income, the AO made addition in the A.Y.2006-07 on account of on money alleged to be received by the assessee. AO also made addition on account of alleged capital gain on surrender of tenancy rights. 7. By the impugned order, CIT(A) deleted the addition made on account of unexplained sales. However addition made on account of surrender of tenancy right was upheld by CIT(A). 8. Against the above order of CIT(A) both assessee and Revenue are in further appeal before us. 9. At the outset, it was contended by learned AR that issue is covered by the decision of the Co-ordinate Bench in case of Group Concern M/s. Giriraj Developers, wherein Tribunal deleted the addition by observing that there was no incriminating material with respect to the additions made by the AO. Further, contention of the learned AR was that the basis of addition was documents impounded during the course of survey at the assessee's office premises and not during the course of search at premises of Haresh Patel which is very clear from the assessment order itself. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g been seized during the search. In such a scenario, proper course of action was reassessment u/s 147 read with section 148 of the Act. 11. Learned AR further contended that the Act stipulates that the incriminating material has to be assessment year specific. In the present case, neither the seized documents nor the impounded documents in the case of survey proceeding nor the statement on oath u/s. 132(4) relate to assessment year 2006-07. For invoking section 153C (1), the Id. Assessing Officer should be in receipt of assessment year specific material. The said view has been made clear by the amendment to section 153C by Finance Act, 2014 which stipulates "bearing on the determination of the total income of such other person for the relevant assessment year or years". The Hon'ble Bench of Kolkatta ITAT in the case of Hi-Tech Industries v. DCIT (ITA 84-86/Kol/2011) and Third Member of the Hon'ble Bench of Cochin ITAT in the case of Hotel Royale Park v. DCIT (ITA 601 -603/Coch/2013) and Royal Cartons Pvt Ltd (ITA 472.Coch/2013) has observed that the amendment to section 153C is clarificatory and accordingly would operate retrospectively. The Hon'ble Madhya Pradesh High court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without jurisdiction. 13. In the instant case before us, in view of the fact that' no incriminating material was found in case of search at the premise of third person (Mr. Haresh Patel) and that no satisfaction note has been drawn by the learned Assessing Officer, we respectfully follow the decision of co-ordinate bench in the case of sister concern of the assessee - M/s. Giriraj Developers (ITA 5067/5113-14/Mum/2009) rendered under the same set of facts; wherein the appeal has been decided in the favour of the assessee based on the decision in the case of Hon'ble Madhya Pradesh High court in the case of CIT v. Mechmen, Hon'ble Apex Court in the case of CIT v. Calcutta Knitwears and CBDT Circular No. 24/2015. We found that the facts of the said case are same in as much as assessment in the said case was framed based on the same search action relying on the same statement and a similar addition in relation to alleged on- money has been made. 14. However, the Departmental Representative has relied on para 2 of assessment order that Annexure A-1 (page no.1 to 27) found from the premises of Mr. Haresh Patel, director of the assessee company were incriminating in nature. We find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action for A.Y. 2006-07. The CIT(A) has dealt with the issue threadbare relying on the decision in case of Royal Marwar Tobacco Products Pvt. Ltd., 29 Sot 53 and deleted the addition. Precise observation of CIT(A) was as under:- "In so far as additions made in AY 2006-07 is concerned, there is absolutely no basis for making any addition. No presumption as applicable to AY 2007-08 could not be applied to earlier years for want of any evidence relating to those years. The seized paper and the entry recorded therein do not pertain to the AY 200S-07. In this connection, apart from the cited decision in the case of Royal Marwar(supra), reference could be made to the case of Dr. Surendranath Reddy vs ACIT(2000) 72 ITD 205(Hyd), in which it was observed that when no materials were found to for some other assessment year, it would not be proper for the AO to estimate any suppression. For estimating the suppression, there should be some substance available or each assessment year independenclly. The principle of unit of assessment year is not diluted in block assessments also. Undisclosed income has to be invariably determined with reference to each previous year included in the block per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y was only a tenant and was earning only rented income out of sub-tenancy, there was always a pressure from the landlord to vacate the premises. As the pressure from the landlord mounted, the assessee company had to surrender the tenancy to the landlords. Thus, no transaction ever took place between the Assessee Company and said Shri Ravindra G. Jain, who have obtained the said tenancy right directly from the landlords and the assessee was never a party to that agreement. The assessee is given to understand that said Shri Ravindra G. Jain has admitted to have acquired the tenancy rights in the said premises from the landlord directly and there was no transaction between the present tenant and the assessee. In fact, the tenancy rights cannot be directly sold by a monthly tenant and have to be surrendered to the landlord. Thus, we do not find any merit in the AO's action holding that assessee had a capital asset in the form of tenancy right and for surrender of which assessee has got the money. There is no basis for such assumption. Furthermore there is no evidence that the assessee has received any sum for surrender of tenancy rights and accordingly no addition is called for in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th to him. In this regard, we found that the replies given by him clearly indicate that ready answers were not available with him on the day of survey as the recording of noting in the books of accounts were known to him. Further, his statement was recorded u/s. 133A of the Act and no reliance can be placed on the same in view of the decision of the Hon'ble Apex Court in the case of S. Khader Khan Son [2012] 25 taxmann.com 413 (SC), However, during the course of survey one cannot be readily available with all the answers. Infact, the CBDT has clarified it time and again that during the course of search/ survey operations emphasis must be laid on gathering evidences and strictly prohibited obtaining of confessions or statements i.e. Circular No. F.No.286/2/2003-IT (In) dated 10.03.2003 and Circular F.No.286/98/2013- IT (INV.II)] dated 18/12/2014. This view has also been propounded by the courts in various cases including CIT v. Ramanbhai Patel (Guj HC) (TA 207-210 of 2008), Chetnaben Shah v. ITO (Guj HC) (TA 1437 of 2012) Further, also the allegation of receipt of on-money has been categorically denied by the said Shri. Bhawan Patel at reply to qn. No. 22 at page 127 of the paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strong may be, cannot take the place of evidence or is no substitute of evidence. 24. With regard to the allegation of department that the Assessee-Company has received on-money, it is important to note that the director of the assessee company had been searched and the assessee's premises surveyed. However, no undisclosed cash, investments, expenditure, etc. had been found either in the course of search and survey proceedings in relation to the assessee. It may be appreciated that if infact there was such a huge receipt of on- money as alleged by the revenue, then the revenue should have been able to corroborate it with evidences in the form of undisclosed cash, investment or expenditure. The fact that no such evidences were available as regard to undisclosed cash, expenses or investment infact also substantiates the claim of the assessee that no on-money was received by it. 25. Notwithstanding the above observation, since the survey party has found that the assessee was not able to substantiate fully with corroborative evidences that the amount of ₹ 8,90,000/- was not received in cash addition of ₹ 8,90,000 is warranted. However, since the assessee had already off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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