9911796707
TMI Blog2021 (1) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... group and some other companies on 15.11.2007. However, admittedly, no search was conducted on assessee. 2.1.0 For AY 2006-07, the return of income declaring income of Rs. 4,03,150/- was filed on 15.11.2006. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called 'the Act') and no assessment was completed u/s 143(3) of the Act. During the course of search on BPTP group, certain documents were found and seized. As per these seized documents and on the basis of post search enquiries, the Assessing Officer (AO) held that BPTP and its group companies were purchasing land by making some payment at the time of execution and registration of sale deeds and balance payment was made through post-dated cheques and for the period in between from the date of sale deed to the date of encashment of post-dated cheques, interest in cash at the rate of 1.25% p.m. was being paid in cash to vendors of land outside the books of accounts. 2.1.1 The AO recorded reasons for reopening of the assessment on 29.03.2010 and issued notice u/s 148 of Income Tax Act, 1961. The Assessee filed return of income in response to notice u/s 148. Reasons recorded for the reopening of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pite i. that the seized record on the basis of which above finding was given, even according to his own finding by the CIT(A), did not belong to the appellant and, ii. that no enquiries were made from any of the alleged recipients of the interest and none was confronted with relevant document(s). 3.1 That the finding of the CIT (A) is based on mere surmises and conjectures without proof and corroboration by independent evidence. 3.2 That without prejudice the CIT (A) erred in upholding the addition of interest for the period for which PDC's were extended. 3.3. That without prejudice the CIT (A) erred in not quantifying the addition and instead giving ambiguous directions to compute the interest after six months from the date of sale. 4. That on the facts and circumstances of the case and in law the CIT (A) erred in not accepting the appellant's contention that Additional Payments having not been claimed as deduction by appellant, no disallowance could have been made in the hands of the appellant. 4.1 That without prejudice the CIT (A) erred in upholding the disallowance of Additional Payments made to the recipients who were not the owners of land and to the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and circumstances of the case and in law the CIT (A) erred in rejecting appellant's contention that assessment order made by Assessing Officer was bad in law and void ab-initio on the ground that it ought to have been made u/s 153C of the Income Tax Act, and not, as was done u/s 143(3) of the Income Tax Act. 2. That without prejudice, on the facts and circumstances of the case and in law, the CIT (A) erred in upholding the action of the Assessing Officer in relying upon the material seized in the case of search on M/s BPTP group of cases despite:- i) that such material had no nexus/relevance with the case of the appellant and, ii) that, the CIT (A) himself holding that such material did not belong to the appellant. 3. That on the facts and circumstances of the case and in law the CIT (A) erred in holding to quote, 'that seized documents definitely prove that interest is paid on PDC' despite i. that the seized record on the basis of which above finding was given, even according to his own finding by the CIT (A), did not belong to the appellant and, ii. that no enquiries were made from any of the alleged recipients of the interest and none was confront ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S IN CASE OF WESTLAND DEVELOPERS - AY- 2006-07 Reasons for reopening the case u/s 147 read with section 148 Assessment in this case was completed vide order u/s 143(3) dated 31.12.2008 at an income of Rs. 8,01,951/- A search and seizure action was conducted on BPTP and its Group companies on 15.11.2007. Certain documents seized in the search action (Details enclosed as per Annexure-A) on the Group and the post-search enquiries made revealed that the group was following a business model as a part of which only part payments of the sale consideration in respect of the land purchased were paid at the time of execution of the sale-deed and the payment of balance sale consideration was invariably made through post dated-cheques (PDCs) and for the intervening period i.e. period between the date of sale-deed and the date of encashment of PDCs interest was paid in cash to the vendors of the land by the vendee company on monthly basis @ 1.25% p.m. on the amount of PDCs. During the course of post search enquiries, it was also noticed that the said payment of interest by the vendee company in cash has not been accounted for by it in its books of account. The assessee company has also pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional payments 'aggregating to Rs. 9,52,625/- against the purchase of land to various land owner's. The post-search Investigations / enquiries were also made to verify the genuineness of the additional payments actually having been made end summons u/s 131 were issued to several farmers from whom the land was acquired. The enquiries made revealed that the additional payments made were not genuine. Moreover, the additional payments were made in violation of the section 24 of the Stamp Duty Act and as such the same are not admissible as expenditure as per explanation to u/s 37 (I) of the I.T. Act. The income has, thus, been under assessed to the extent of Re.9,52,625/- on account of additional payments against the purchase of land I have, therefore reasons to believe that income chargeable to tax amounting to Rs. 34,30,705/- (Rs. 24,78,080+Rs. 9,52,625) has escaped assessment within meaning of section 147. Notice u/s 148 is issued." 3.2 The Ld. AR submitted that 'Annexure -A' which is annexed along with reasons recorded and contains details of seized documents seized during the course of search on BPTP group in case of Westland Developers Pvt. Ltd. was also annexed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA no. 1757/Del/2013 vide order dated 23.11.2015 wherein it was held by the Tribunal that in absence of any cogent, definite material which belonged to the assessee or any evidence demonstrating the payment of interest by the assessee on PDCs, reasons recorded for initiation of proceedings u/s 147 will not be in consonance with law having been based on mere suppositions, surmises and extrapolation of the material seized. The Ld. AR submitted that in this case, the Tribunal completely discarded the argument of the AO and the Ld. CIT (A) of common management and assessee belonging to the same group and held that it cannot be equated with existence of incriminating seized material belonging to assessee. It was submitted that this order of the Tribunal equally applies to the present case. It was submitted by Ld. AR that in the aforesaid case also, the same AO took action u/s 147 of the Act on the basis of material seized u/s 132 in the case of search conducted on BPTP Ltd on 15.11.2007 (and there was no search on that assessee -West Land Developers) which had no nexus with West Land Developers and none of the documents belonged to West Land Developers. It was submitted that the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther stated that there is no mention of any adverse finding in the case of the assesse of any investigation done by the AO or any other authority. 3.11 In respect of the observations of the AO that additional payments were in violation of Section 24 of the Stamp Duty Act and not admissible as expenditure as per explanation to Section 37(1) of the Income Tax Act, the Ld. AR argued that additional payment is a payment which is made subsequent to execution and registration of sale deed. It is duly recorded in the books of account. The assessee has received reimbursement of additional payments made from Countrywide Promoters Pvt. Ltd. This Additional payment is neither debited to the Profit & Loss a/c nor claimed as expenditure in the computation of Taxable income. It was submitted that, therefore, the question of making disallowance on account of additional payment in the hands of assessee does not arise. He further stated that appeals of all the group companies are allowed by various co-ordinate benches of Tribunal on this issue. 3.12 The Ld. AR also drew our attention to the finding of the Ld. CIT (A) in Para 6.3.7 of his order (Page 24) that the additional payment is not illega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. As per these seized documents and on the basis of post search enquiries, the AO held that BPTP and its group companies were purchasing land by making part payment at the time of execution and registration of sale deed and the balance payment was made through post-dated cheques and for the period in between from the date of sale deed to the date of encashment of post-dated cheques, interest in cash at the rate of 1.25% per month was allegedly paid in cash to vendors of land outside the books of account. The Ld. AR submitted that the AO issued notice u/s 143(2) of the Act and completed the assessment by making addition on account of interest paid on post-dated cheques of Rs. 28,93,733/- in cash outside the books of accounts. It was submitted that while making the impugned addition on account of interest paid on post-dated cheques, the AO had used lot of seized documents seized during the course of search on 15.11.2007 on BPTP Ltd. and some of its group companies. 5.2 During the course of hearing, the Ld. AR filed detailed synopsis along with 242 pages paper book and submitted that none of the seized material found, seized and used in the assessment order belongs to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o nexus with West Land Developers and none of the documents belonged to West Land Developers. It was submitted that the Tribunal disapproved the action of AO in making use of the 'alien material' having no specific nexus with the assessee. 5.7 The Ld. AR argued that the finding of the Ld. CIT (A) of justifying the use of seized documents of other assessee on the contention that these seized documents have shown some trend of unaccounted expenditure in the form of PDC interest is not justifiable and correct in view of fact that each assessee is separate and distinct and addition cannot be made on the basis of seized documents of other assessee simply on a presumption. 5.8 The Ld. AR further submitted that none of the parties from whom land was purchased by the assessee were called by the AO. No enquiries were conducted by the AO from any of the vendors of land. It was submitted that the assessee had requested the AO to call these parties by issuing summon u/s 131 of the Act and examine them. However, none of the parties were called and examined by the AO. 5.9 The Ld. AR argued that although nothing is stated by the AO as to under which provision of law addition on account of PDC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT (A) has not accepted the statement of Shri Chottu Ram as Shri Chottu Ram in his statement had stated that normally PDCs were given for a period of 8 to 10 months while the Ld. CIT (A) has allowed relief only for the period up to six month. It was submitted that no reason or justification has been given by the Ld. CIT (A) for allowing relief for a period up to six months as against period of 8 to 10 months as stated by Shri Chottu Ram and sustaining addition for the period beyond six months. The Ld. AR further argued that in the case of the assessee even if a lower period of 8 months, as stated by Shri Chottu Ram, is considered then, the entire of addition needs to be deleted as the maximum period in the case of the assessee within which the PDCs were en-cashed is of 6.5 months only. 6.0 The Ld. Sr. DR supported the assessment order for making the addition on account of interest paid on post-dated cheques. The Ld. Sr. DR submitted that the assessee is part of the BPTP group which is headed and controlled by Mr. Kabul Chawla. Search was conducted on BPTP group on 15.11.2007. Lots of incriminating documents were found during the course of search and seized. Post search enqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (SC). However, in our considered view this judgment would apply only where in the course of search, documents of any other assessee are found. However, undisputedly, in the present case, no documents belonging to the assessee were found during the course of search. This issue is dealt at length by a co-ordinate Bench of this Tribunal in the case of one of the group companies of the assessee M/s Westland Developers Pvt. Ltd. in ITA no. 1757/Del/2013 vide order dated 23.11.2015 wherein at Para 7 of order, the following was held: "7. Now adverting to the second limb of assessee's stand, i.e., whether the reasons recorded for forming the belief of escapement of income on the basis of material seized are justified or vague to take recourse of section 147. In this context, on perusal of the orders of authorities below, we find that the assessee has categorically denied that any of the seized documents, discussed in the impugned order, belonged to the assessee. We also find that the assessment order also nowhere records any finding that any of the documents seized belong to the assessee. Even the ld. CIT(A) at para 4.3 has categorically stated that the assessment order nowhere mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the assessment proceedings were reopened. However, in this case there is one more issue of payment of additional payment besides the issue of PDC interest which was made the basis for reopening of assessment proceedings. There is nothing in the reasons recorded that the payments of additional payments made by the assesses is claimed by the assesses as the stand of the assessee is that the payments of additional payments made by the assessee are neither debited to the Profit & Loss account nor claimed by the assessee as expenditure. Nothing has been brought on record by the department to demonstrate that additional payments made by the assesse are claimed by the assessee as deduction. Even the basis of disallowance of additional payments in terms of explanation of Section 37(1) has been dismissed by the Hon'ble Delhi High Court in the case of Vasundara Promoters Pvt. Ltd. Thus, this ground was also not a valid ground for reopening of assessment proceedings of assessee. 7.3 In our considered view, each and every assessee is a separate and distinct assessee. It is a fact on record that no seized material belonging to the assessee was found during the course of search on BPTP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2015 wherein it was held by the Tribunal that in absence of any cogent, definite material which belonged to the assessee or any evidence demonstrating the payment of interest by the assessee on PDCs, reasons recorded for initiation of proceedings u/s 147 were not in consonance with law having been based on mere suppositions, surmises and extrapolation of material seized. The bench completely discarded the argument of AO and Ld. CIT (A) of common management and the assessee belonging to the same group and held that it cannot be equated with existence of incriminating seized material belonging to the assessee. In this case also, there is no seized document found which belongs to the assessee and it is so confirmed by the Ld. CIT (A) also in his order. No statement of any vendors of land is recorded by the AO. Statement of Shri Chottu Ram is referred to although the assessee has denied to have purchased any land from Shri Chottu Ram. The statement of Shri Chottu Ram was not even provided to the assessee. In our view, the statement of Shri Chottu Ram cannot be made as the basis for taking adverse inference without the assessee even having been confronted with it. Reliance is placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f land as amount paid is neither debited to the Profit & Loss a/c nor claimed as deduction in the Computation of Taxable income as the assessee has received reimbursement of amount from M/s Countrywide Promoters Pvt. Ltd. He has further stated that the issue is covered by the decision of the co-ordinate bench of the ITAT 'H' bench, New Delhi in case of M/s West Land Developers Pvt. Ltd. in ITA no. 1752/Del/2013 vide order dated 22.08.2014. He has further stated that no appeal was filed by the department against this order before the Hon'ble Delhi High Court. It has further been stated that this issue is decided in favour of various assesses by the co-ordinate benches of the Tribunal in 31 other appeals of group companies of BPTP. On the other hand, the Ld. Sr. DR has placed reliance on the concurrent findings of the lower authorities. It is seen that the issue of disallowance u/s 40A (3) is decided by several co-ordinate benches in various cases of group companies of BPTP in favour of the respective assessees by taking the view that issue of disallowance of expenses does not arise as the amount paid for purchase of land is neither debited to the Profit & loss a/c nor claimed as ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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