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TMI Blog2021 (2) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... - SUPREME COURT] may be referred in this regard. This primary onus could never be shifted upon the assessee successfully in the instant case. The Revenue has not adduced any cogent material which could expose the falsehood in the records of the assessee Despite drastic action of search on a third party, no material other than the loose document of inexplicable nature whose author is not known and which does not bear any material particulars, was brought on record to implicate the assessee. A lump sum figure of ₹ 5.30 crores written in summary manner in bottom side of loose paper is the basis for whole action. CIT(A) itself has recorded that a direction was given to the AO to record fresh statement of the witness of the department, i.e. purchaser Mehul G. Patel and also grant cross-examination thereon to the assessee in case of any adverse inference. Needless to say, when a statutory direction has been given to do an act in a particular manner, the AO could not have refused to do so. Apart from loose paper and an obscure statement of third party, there is nothing else in the possession of the AO. The primary onus which lay upon the AO to support its allegation against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have held in so in chorus in D R Construction vs. ITO [ 2011 (4) TMI 1343 - ITAT AHMEDABAD] Ranade Dighe and Associates [ 2011 (8) TMI 1183 - ITAT PUNE] . Thus when tested on the touchstone of year of taxability also, the action of the AO is unfounded. We however do not seek to delineate any further as the we see no merits in additions in either of the years owing to failure of the AO to shift its onus on assessee - Decided in favour of assessee. - IT(SS)A No.156/Ahd/2019, IT(SS)A No.155/Ahd/2019 - - - Dated:- 8-12-2020 - Shri Rajpal Yadav, Vice-President And Shri Pradip Kumar Kedia, Accountant Member For the Assessee : Shri S.N. Soparkar, Sr.Adv. For the Revenue : Shri Virendra Ojha, CIT-DR ORDER PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER These two appeals by the above assessees are against orders of the ld.CIT(A)-12, Ahmedabad of even dated i.e. 7.1.2019 for the Asstt.Year 2013- 14. Since issues involved in both the cases are inter-connected to each other, for the sake of convenience, we dispose of both these appeals by this common order. 2. Since facts in both the cases are connected and bear similar facts, for adjudication the issue on hand, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que payment for that land was at ₹ 85 lakhs and Shri Vagjibhai was the person who looked after the land of Shri Rakesh Kantilal Patel and hence he was given four units, which were valued at ₹ 53.54 lakhs. Hence, total value of the land parcel of this project was at ₹ 188.54 lakhs. In the light of the loose page, a cash payment of ₹ 5.30 crores paid for the land for these three projects was mentioned. 4. It will be apposite to reproduce the scanned image of loose page relied by the AO to appreciate the manual jottings of entries in its natural perspective: 5. The assessee, Shri Kantilal Premjibhai Patel is the owner of block no.501 on which project named the Sun was proposed. The said land was earlier purchased by the assessee on 16.5.2011 for which consideration was paid by way of cheque and recorded in the books. An agreement to sale ( Banakhat ) for the aforesaid block no.501 was carried out by the assessee and the Sun Infra, a partnership firm engaged in the business of construction on 29.4.2013 for a total consideration of ₹ 6.50 crores. The entire sale consideration of the said land was stated to be received in the financial year 2013-14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the sellers in the ratio of their respective holding in the land, which was tabulated by the AO as under: Particulars Of Land Holders The Sun Builtcon (Rs.) The Dove Infra (Rs.) The Sun Infra (**) Total (Rs.) Particulars Of Land Holders Rakeshbhai 70% 11751979.78 5032097.725 0 16784077.5 Rakeshbhai - 70% Chhotbhai 30% 5036562.763 2156613.311 0 7193176.07 Chhotbhai -30% Kantibhai 0 0 29022746 29022746 Kantibhai Unaccounted cash receipt 16788542.54 7188711.036 29022746 53000000 Unaccounted cash receipt 7. The AO accordingly resorted to additions in respect of unaccounted cash receipts of sale of land at village Bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, not applicable for the abated assessment years and the assessment year related to the financial year in. which the search was conducted. For these years the AO is free to traverse beyond the seized materials and to conduct his own investigation and make additions, based on his findings, as per the Income-tax provisions. 7.1 As per the provisions of section 153C, the proceeding is initiated against a person (not covered by search and against whom the proceedings u/s 153A does not lie) only if the assets and other valuables seized belong to and/or the documents or books of accounts seized relate to such person (other than the person referred to in section 153A) and that after recording of the satisfaction by the AO of the person u/s 153A and handing over of the documents or assets seized to the AO of the such person (to be covered u/s 153C), the said AO will initiate the proceedings u/s 153C and complete the assessment(s) in the manner prescribed u/s 153A. It implies that not only the decisions of the Tribunals and the Courts in the context of proceedings u/s 153A will be equally applicable in the context of assessment proceedings u/s 153C but according to me the live link ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Income Tax Settlement Commission which was rejected and that the assessment proceedings are pending and is to be completed by February 2019. No fresh statement of Shri Mehul G. Patel was recorded and no opportunity to Shri Kantibhai Patel and Shri Chhotalal Patel to cross-examine Shri Mehul Patel was given by the AO but it was reiterated by the AO that Shri Mehul G. Patel has confirmed cash payment of ₹ 5,37,00,000/- as given to the land owners of these three projects over and above cheque payments. 7.5 In the rejoinder to the AO's report, the appellant reiterated that Shri Mehul G. Patel has not stated to have made cash payment to the appellant and co-sellers by name and has filed an affidavit of Shri Mehul G. Patel wherein at para 7 and 8 it has been clarified by the deponent that the payment of ₹ 5.3 crores was made to some old land owners/Banakhat holder (Bharwad/farmers) who were claiming ownership of the said land, that no such cash payment was made to Shri Chhotabhai P. Patel, Shri Rakesh Patel or Shri Kantibhai Patel who were actual owners in the said blocks of land and' that he has denied to have paid any unaccounted cash of ₹ 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- (or cheque and cash of ₹ 15,80,75,00/- or ₹ 15,23,75,000/- as the case may be) as per the Page 17 of Annexure A-3, the issue of cash payment of ₹ 5,37,00,000/-does not get covered and explained. As the payment of ₹ 5,37,00,000/- has been admitted by Shri Mehul G. Patel, the amount would definitely be added in his hands or in the hands of his concerns, being the buyer(s) if the sources of such payments are not accounted for to be out of disclosed sources. But at the same time the transaction being of sale/transfer of property, the amount of ₹ 5,37,00,000/- is also liable to be added in the hands of sellers (or recipients as the case may be). However, the appellant and co-sellers are denying to have received any cash because as per them the relied upon seized document does bear their names (and as also the document is not in their hand writings and not signed by them). It was in this regard that to further buttress their contentions, the appellant has produced an affidavit of Shri Mehul Patel. But I have to at the least agree with the AO that even if the affidavit of Shri Mehul G. Patel is taken to be true, Shri Mehul G. Patel has to identify the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 153C and to make the impugned assessment order are legally tenable and valid. In the facts and circumstances of the case, the AO is justified in holding that there was cash payment of ₹ 5.30 crores to the co-sellers for sale of land and that the payment of ₹ 2,90,22,746/- was to the appellant and same has not been disclosed in the books of accounts and in the return of income by the appellant. Thus it is upheld that the amount of ₹ 2,90,22,746/- is liable t6 added in the hands of the appellant. The addition made by the AO is confirmed and the appeal fails. 9. Further aggrieved, the assessee preferred appeal before the Tribunal seeking to assail the findings and conclusion of the CIT(A) rendered against the assessee. 10. When the matter was called for hearing, Mr. Soparkar, the ld.senior counsel for the assessee submitted at the outset that he does not consider it expedient to press the issue of jurisdiction as raised in ground no.1 and 2 of the respective appeals in view of the prospective amendment carried out in the provisions of section 153C of the Income Tax Act, 1961 with effect from 1st June, 2015 whereby the scope and ambit of section 153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tt.Year 2013-14 in question in the absence of any sale of land parcels in that year and consequently, addition so made deserves to be struck down on this score itself. 10.2 Mr. Soparkar, thereafter adverted to the loose paper as reproduced in preceding paragraph-(4) of this order, which is the fulcrum for initiation of proceedings under section 153C of the Act as well as additions on the basis of contents of such loose papers. He submitted that the first part of the loose paper would show Bil 501 = The Sun under which ₹ 6,50,00,000/- is stated to be paid by purchaser (builder) to the seller (assessee). Below thereof, there is another entry of ₹ 72,00,000 whereby it appears that this amount has been paid to Shri Dineshbhai, who is informed to be predecessor land owner to us. At the bottom of the aforesaid loose paper, a sum of 5,30,00,000 is stated to have been paid in cash for three projects including the Sun relating to the assessee. This is the entry in controversy. The AO has made pro-rata allocation of the aforesaid amount of cash in the hands of the sellers i.e. Kantilal P. Patel, Chhottalal P. Patel and Rakeshbhai K. Patel in proportion to their respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis thereof. These facts are unknown every today. Thus, a valuable right available to the assessee in the form of cross-examination was denied despite specific request of assessee and specific direction of the ld.CIT(A). 10.3 The ld. Senior Counsel submitted that the whole basis of addition is handwritten loose paper found from the premises of the searched person Shri Mehul G. Patel which was neither signed nor written by the assessee or other appellants herein. It was pointed out that the loose paper is vague in the absence of name of the assessee. Further, date of payments allegedly made to the land owners is not available. The statement of searched person eliciting details of the loose papers also does not identify the name of the assessee per se . Subsequent affidavit of the searched person yet again supports claim of the assessee that the payment was not made to him at all. The sale consideration was received through banking channel, which has been duly recorded. 10.4 The ld. Sr.Counsel vehemently reiterated that despite specific request for cross-examination, the searched person was not confronted to the assessee for unearthing the truth. The ld.senior counsel r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted cash has been paid to S/Shri Kantilal P. Patel, Chhottalal P. Patel and Rakeshbhai K. Patel, who happened to be land owners in the instant case. The AO, therefore, in the absence of specific break-up has rightly allocated aggregate cash payment in the hands of all the three sellers including the assessee herein in proportion to their land holdings for the purpose of quantification of unaccounted income. 11.1 The ld.DR then pointed out that affidavit of the purchaser filed by the assessee at the belated stage before the ld.CIT(A) is an afterthought and of no consequence. It was pointed out that the statement was recorded under section 132(4) on 24.9.2015 whereas the assessment was carried out on 29.12.2017. However, the affidavit was filed after a gap of three years on 16.10.2018. Such affidavit which attempts to divert goal-post and tries to exonerate the assessees who are land owners do not resonate with ground realities, and hence was no merit. It is not always expected from a person giving impugned cash to admit at a belated stage adverse to the seller and in favour of Revenue. 11.2 In rebuttal of the contentions made on behalf of the assessee about the taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsonal cause between the CIT(A) and the AO. For this purpose, the ld.senior counsel referred to the decision in the case of Bhopal Sugar Industries Ltd. Vs. ITO 40 ITR 618 (SC) . The ld.counsel next pointed out that presumption under section 132(4A) of the Act in respect of statement recorded under section 132(4) is not available against a third-person i.e. the assessee (herein) from whose possession such papers and the alleged documents were discovered. The statement of searched person recorded at the back of the assessee cannot conclude the case against the assessee particularly when maker of such unclear and vague statement has not been allowed to be interrogated by the assessee. It is wrong on the part of the Revenue to contend admissibility of statement under section 132(4) as evidence against the assessee. 13. On a query from the Bench, the ld.counsel for the assessee pointed out that no additions has been made in the hands of seller viz. Rakesh K. Patel to the best of his knowledge. The ld.DR could not throw any light on this query. 14. We have carefully considered rival submissions and orders of the AO and the CIT(A) and perused the case laws cited at Bar. Only issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of first appellant, Shri Kantilal P. Patel and ₹ 71,93,176/- in the hands of second appellant viz. Chhotalal P. Patel herein. These additions are the subject matter of present controversy. Whereabouts of similar action under S. 153C, if any, for a part component allegedly attributable in the hands of Shri Rakesh Patel is, however, not known at this stage. 14.2 In the first appeal, the CIT(A) did not find merit in the plea of the assessee for lack of any substance in the action of the AO towards such additions. The CIT(A) also placed reliance upon the impugned loose paper and the statement of the searched person made under S. 132(4) of the Act and observed that onus of MGP under section 132(4A) and S. 292C would be considered to be discharged only if those named persons i.e. other land owners/predecessor are also identified by him to whom the cash/on-money was given by him and these persons simultaneously owns up having received such on-money consideration for repudiation of their so called invisible rights in the landholdings. It was observed that a mere assertion that such cash payments were not made to the assessee and co-sellers herein does not break the ice and henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P, CPP RKP) and also other persons as stakeholders in the same breath, in some way. Similarly alongside the alleged cash payment stated to be ₹ 5.30 crores, the payments to Bharwad is also penned down. Thus, the loose paper itself signifies a very presence of other parties in the consummation of sale transaction together with land owners( KPP etc.) and purchasers. As noticed earlier, it is not yet known as to whom and when and how such huge cash payment were purportedly made for relevant elucidation in this regard. The solitary loose paper in reference is stoically silent on this crucial aspect. There is no reference to any post search enquiry from the sellers to elicit some meaningful information on such crucial aspect. The loose paper, thus, when seen in its own, scarcely provide any sustainable basis to brand the assessee as purported recipients of unaccounted money. The admitted presence of other persons sharing sale consideration along with the appellants herein poses challenge to the inference that appellants were the only beneficiaries of all receipts as land owners in exclusion to others. In the absence of any kind of inquiry pertinent in this regard, a nondescript ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h payment of ₹ 5.30 cr. to the land owners of three projects over and above cheque payments. 14.5 Unmoved by such blatant subversion of statutory directions by the AO, the CIT(A) has paradoxically given totally untenable observations made in para 7.7 7.8 to lend support to the action of the AO. For instance (i) the CIT(A) observes that MGP was under obligation to identify the persons to whom the payment of ₹ 5.37 crores have been paid. Hence, for failure of MGP to give details and for failure of the search party to seek specific details thereon and yet again nonchalance demonstrated by the AO in remand proceedings, the Assessee (a third party) is being sought to be crucified (ii) the statutory presumption embodied under S. 292C 132(4A) for documents found in search operates adverse to the person in whose control or possession, such documents are found and non else. However, in a glaring demonstration of perversity, the assessee herein has been held to be responsible failure of the searched person to discharge purported onus cast upon him (iii) the stand of the CIT(A) on admissibility of affidavit is marred by gross inconsistency. The CIT(A), after refusal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment, i.e. purchaser Mehul G. Patel and also grant cross-examination thereon to the assessee in case of any adverse inference. Needless to say, when a statutory direction has been given to do an act in a particular manner, the AO could not have refused to do so. Apart from loose paper and an obscure statement of third party, there is nothing else in the possession of the AO. The primary onus which lay upon the AO to support its allegation against the assessee was never shifted. In such a situation, in the absence of any demonstrable evidence, the stage for cross examination never arose. Nevertheless, the Assessee on its part, has demonstrated from the loose paper itself that apart from the land owners i.e. appellants herein, there were other stakeholders too who received money from the purchasers for execution of sale to sail through. Thus, an evident uncertainty doubt had crept in about actual recipient of purported cash component. Before the CIT(A), the assessee also filed duly sworn affidavit of Mehul G. Patel whereby he affirmed on oath that the cash payments were not made to the assessee and other appellants herein but was paid to some old land owners/ banakhat owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maker may possibly operate as estoppel against him in certain circumstances. However, truthfulness thereof is required to be proved beyond doubt for it to bind a third party. The deptt. was duty bound to give cross examination of the maker where it seeks to rely upon it. Failure to do so has resulted in serious flaw and has rendered the action a nullity as ruled by the Hon ble Supreme Court in the case of Andaman Timber Industries vs. CCE(2015) 281 CTR 241(SC) . The AO has flouted these well settled principles in this case despite a specific direction from the CIT(A). On the basis of an inchoate loose paper a non speaking statement under S. 132(4) given by searched person, the revenue has wrongly sought to draw presumption against the assessee in terms of S. 292C 132(4A) of the Act without any vindication thereof. Such act is directly at odds with the decision of the Hon ble Gujarat High Court rendered in the case of Dy. CIT vs. Prarthana Construction [Tax appeal no. 79 of 2000 judgment dated 25/03/2011] . Besides, the Assessee has also placed the affidavit of the searched person on record to the effect that no such cash on-money was paid to the appellants herein. No enquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X
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