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TMI Blog2021 (2) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... edings u/s.153C are bad in law and therefore the assessments so made deserves to be quashed. This ground of the assessee s appeal is allowed. Undisclosed on money payment - As on 27.11.2010 an amount of 10,00,000 was paid as per the agreement, and an amount of 8,00,000 was deposited in the bank account of the sellers. Similarly, upto 10.12.2010, 40,00,000 was to be paid and 37,00,000 was deposited nearing to that date. Further, upto 10.04.2011 50,00,000 was to be paid as per the agreement; and 29,99,000 was deposited on 31.03.2011 and 24,70,000 was deposited between 15 to 18 April 2011. Similarly, upto 10.08.2011 4,03,00,000 was to be paid; and between Aug. and Sept. 2011, all payments were done and sale deed was also registered in the favour of M/s. Agrawal Buildcon. Considering the entirety of the facts, so far as the payments made, the nexus between amount received from M/s. Agrawal Buildcon and payment to Smt. Rekha Bai and others can be established. Since it is proved that the consideration of 4,03,00,000/- which included both the accounted and unaccounted consideration has been paid by M/s Agrawal Buildcon for the purchase of land in question from the sellers namely Smt. Rekh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised in these appeals by framing common order for the sake of convenience and brevity. 3. In respect of the quantum appeal, the assessees have raised following grounds of appeal:- IT(SS)A 111/Ind/ 2016 - Pradeep Sharma,A.Y. 2011-12 1. That on the fats and in the circumstances of the case, the impugned order passed by the ld. AO is contrary to law, materially incorrect and unsustainable in law as well as on facts. All the finding and conclusion of the ld. AO are also contrary to the material, opposed to the fact, equity and law. 2. That on the facts and in the circumstances of the case and on law as well the ld. AO has erred and was not justified in invoking the provisions of section 153C of the Income tax Act and thereby in making the assessment on the basis of presumption and assumption and without any corroborative material. 3. That the ld. AO has erred and was not justified in rejecting the claim of deduction u/s. 80IB(10) of the I.T. Act at ₹ 29,76,373/-. He has further erred to interpret the provision of section 80IB (10) and thereby disallowing the lawful, valid and legal claim which is fully supported by evidences. Hence the deduction u/s 80IB(10) be kindly all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 12. The AO has erred and was not justified in levying penalty interest u/s. 234-B and further erred in initiating penalty proceeding u/s. 271(1)(c). That the appellant craves leave to add, alter, and amend or to modify any ground(s) on or before the date of hearing. ITA 679/Ind/ 2016 - Pradeep Sharma,A.Y. 2012-13 1. That on the facts and in the circumstances of the case, the impugned order passed by the ld. Lower authorities is contrary to law, materially incorrect and unsustainable in law as well as on facts. All the findings and conclusion of the ld. AO are also contrary to the material, opposed to the facts, equity and law. 2. That on the facts and in the circumstances of the case the ld. Lower authorities have erred and were not justified in invoking the provision of section 153C of the IT Act and thereby making the assessment in the hands of the appellant. The aforesaid action on the part of the ld. Lower authority are bad and visited in law. 3. That the ld. Lower authorities has erred in not considering the submission and the decisions quoted by the appellant judiciously. 4. That the ld. Lower authorities has erred in making addition on account of undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case the ld. Lower authorities have erred and were not justified in invoking the provision of section 148 and 153C of the IT Act and thereby making the assessment in the hands of the appellant. The aforesaid action on the part of the ld. lower authority are bad and visited in law. 3. That on the facts and in the circumstances of the case the Ld. Lower authority were not justified in not accepting the payment made by the appellant after receiving the cash from M/s AgrawalBuildcon. In facts the appellant worked as an agent and therefore has not given any undisclosed amount to the seller of land. 4. That the ld. Lower authorities has erred in making addition of ₹ 1,12,27,401/- in the total income the appellant. The appellant has paid cash part to seller Smt. RekhaBai, Lala Ram and Devi Singh after receiving cash from M/s. AgrawalBuildcon. In facts the appellant worked as an agent and therefore has not given any undisclosed amount to the seller of land. 5. That in view of the matter, the addition made by the ld. Lower authorities of ₹ 1,12,27,401/- on account of undisclosed on money payment to the seller is totally arbitrary, illegal and visited in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2013. PB 20. Business of Assessee : Real Estate Trader and Builder. FACTS The document, which is the basis of initiating proceedings u/s. 153C, as mentioned above, is a sale deed executed between Rekha Bai, Lala Ram and others through Power of Attorney Holders being Pankaj Makhija, Pradeep Sharma and Pradeep Hirani; and Sanjeev Agrawal for Agrawal Buildcon as the buyer. The sale consideration mentioned therein is ₹ 1,76,50,000 was paid by cheque. In the satisfaction, there was no mention of any incriminating document. The very basis of the satisfaction is the Sale deed of ₹ 1,76,50,000. This would be clear from the satisfaction note at PB 17. This sale deed, of course mentioned the name of the assessee, but did not "belong" to the "assessee". Relevant Provision Before, its amendment by Finance Act, 2015 w.e.f. 01.06.2015, the relevant section 153C(1) read as under: "Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151, and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or document seized belongs or belong t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A............". Thus, after 2015, in respect of assets, the words "Belong" was used and in respect of documents, the words "pertains"/ "relates" were used. The position before this amendment, is thus made more clear, that prior to the amendment, the legislature only used the words "belong". Section 153C(1) grants jurisdiction and therefore a strict interpretation is required for same. Even the CBDT Circular No. 19/ 2015 dated 27th Nov. 2015, which explained the amendment read as under: "39. Assessment of income of a person other than the person in whose case search has been initiated or books of account, other documents or assets have been requisitioned. 39.1 Section 153C of the Income-tax Act relates to assessment of income of any person other than the person in whose case search has been conducted or requisition has been made. The provisions contained in sub-section (1) of the section 153C, before amendment made by the Act, provided that notwithstanding anything contained in section 139, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing officers should not confuse the expression "belongs to" with the expressions "relates to" or "refers to". A registered sale deed, for example, "belongs to" the purchaser of the property although it obviously "relates to" or "refers to" the vendor. In this example if the purchasers premises are searched and the registered sale deed is seized, it cannot be said that it "belongs to" the vendor just because his name is mentioned in the document....". Further, para 14 and 15 would be relevant. In the present case, nothing is mentioned in the satisfaction that Sanjeev Agrawal disowned the sale deed. SLP against the judgment was dismissed; reported at 252 Taxman372 (SC) - copy at PB 222/ II (Case Laws Book). (ii) Canyon Financial Services Ltd. 399 ITR 202 (Del.) In this case, referring to section 153C with section 292C, it was held as under: "13. In the first place, the satisfaction note of the AO of the searched person has to record that the document seized "belongs or belong to the person other than the person referred to in section 153A" of the Act. It was explained in Pepsico India Holdings (P.) Ltd. (supra) and reiterated in Pepsi Foods (P) Ltd. (supra) that, gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n certainly be said to be "pertaining to" to the assessee. However, once it was submitted by the assessee to DEPL, and was found in possession of DEPL, it cannot be said to 'belong' to the assessee. If it has been recovered from the premises of assessee then the position may have been different. Based on the presumption u/s. 132(4A) read with section 292C of the Act, it may have been possible to proceed against the assessee under Section 153A of the Act, subject of course to the document constituting incriminating material. However, in the present case that is not the position. The jurisdictional requirement under section 153C (1) of the Act of the Department having to show that the application made by the assessee for equity shares of DEPL belongs to the assessee is not satisfied." SLP against this judgment was dismissed. PB 232-233/ II (Case Laws Book). (iii) Vijaybhai N. Chandrani 231 CTR 474 (Guj.): 333 ITR 436 (Guj.) Search and Seizure - Assessment under s. 153C - Scope - Condition precedent for issuing notice under s. 153C and assessing or reassessing income of such other person, is that the money, bullion, jewellery or other valuable article or thing or books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only on 1st June 2015 when the amended provisions came into force that the AO of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned pertain to or the information contained therein relates to the assessee. The present case, is much better on facts favouring the assessee as the search was conducted on 20.10.2011 and the satisfaction was recorded on 11.09.2013. Thus both were prior to 1st June 2015. The law prior to 1st June 2015 is applicable and the presumption u/s. 292C is not rebutted. The registered sale deed was seized from Sanjeev Agrawal; infact, it belonged to him and was found from his possession, although the transaction mentioned therein may also 'pertain to' or 'relate to' the appellant. It is further pertinent that this sale deed was not incriminating as the transaction mentioned therein was accounted for. No jurisdiction u/s. 153C could have been assumed therefore. It is therefore prayed that the assessment u/s. 153C is bad-in-law. Two satisfactions: Earlier, the appellant was claiming that two satisfactions shall be recorded; i.e. in the case of the person searched, and in the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Before going further, we may refer that Section 153C(1) of the Act prior to its amendment by Finance Act, 2015 read as under (relevant portion): "(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151, and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or document seized belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other personand that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of the other person in accordance with the provisions of section 153A" Later on, after amendment by Finance Act, 2015 w.e.f. 01.06.2015, section 153C(1) read as under (relevant portion): "(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, - (a) any money, bullion, jewel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viously "relates to" or "refers to" the vendor. In this example if the purchasers premises are searched and the registered sale deed is seized, it cannot be said that it "belongs to" the vendor just because his name is mentioned in the document....". 13. It has also been brought to our notice by the learned counsel for the assessee that SLP against the aforesaid judgment has been dismissed which is reported at 252 Taxman372 (SC). (1) Canyon Financial Services Ltd. 399 ITR 202 (Del.) In this case, referring to section 153C with section 292C, it was held as under: "13. In the first place, the satisfaction note of the AO of the searched person has to record that the document seized "belongs or belong to the person other than the person referred to in section 153A" of the Act. It was explained in Pepsico India Holdings (P.) Ltd. (supra) and reiterated in Pepsi Foods (P) Ltd. (supra) that, given the nature of a particular seized document, in the process of recording his satisfaction, the AO of the searched person may have to note the reasons for his conclusion that the said document does not belong to the searched person but to the other person. It is ont necessary that this shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of Hon'ble Delhi High Court in the case of Pepsico India Holdings P Ltd. Vs Asst CIT (2015) 370 ITR 295 (Del.). Respectfully following this judgment, we therefore hold that the proceedings u/s. 153C are bad in law and therefore the assessments so made deserves to be quashed. This ground of the assessee's appeal is allowed. 15. Since we have held that the assumption of jurisdiction by the Assessing Officer u/s 153C of the Act for framing assessment is not in accordance with law and have quashed the assessment orders on this legal ground itself, the other grounds on merit have become infructuous and merely academic in nature and thus we are not adjudicating the same. 16. Now we take up ITA 679/ Ind/ 2016 for A.Y. 2012-13 in the case of Pradeep Sharma. 17. Ground No. 1 to 3 deal with the validity of the assessment. Same were not pressed during the course of hearing. Same are being dismissed as not pressed. 18. Ground No. 4 relates to the addition on account of undisclosed on money payment at ₹ 1,12,27,401/-. 19. The facts relating to this ground of appeal are that a search and seizure action u/s. 132 of the Income-tax Act, 1961 was undertaken on 21.10.2011 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that the date wise cash deposits in the bank account of the sellers are as under: Name of the person Bank account Amount deposit by cash (In Rs.) Date of deposit 1. Shri Devi singh 3372101000100 Canara Bank 8,00,000/- 29/11/2010 27,00,000/- 10/12/2010 10,00,000/- 16/12/2010 15,00,000/- 31/03/2011 23,00,000/- 15/04/2011 1,70,000/- 18/04/2011 9,00,000/- 13/08/2011 9,50,000/- 01/09/2011 2. Shri Lalaram 3372101000731 Canara Bank 9,50,000/- 13/08/2011 9,50,000/- 01/09/2011 3.Smt. Rekha Bai 3372101000424 Canara Bank 14,99,000/- 31/03/2011 9,50,000/- 13/08/2011 9,50,000/- 01/09/2011 Total 1,56,19,000/- 22. Another pertinent fact is that, during assessment, the assessee in a letter filed on 16/12/2013 accepted that the actual consideration for purchase of the land was ₹ 5,03,68,500/-. Assessee further contended that the land was in fact sold for ₹ 5,30,30,000/- to M/s. Agrawal Buildcon, against the consideration mentioned in the sale deed for ₹ 1,76,50,000. Assessee contended that assessee had only given ₹ 10,00,000/- to Smt. Rekhabai and others from own sources at the time of agreement on 27/11/2010 and balance wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land was agreed to be transferred to M/s. Agrawal Buildcon, the payment was made after receiving the amount from M/s. Agrawal Buildcon. He thus argued that although on-money was paid, but he source of same was established. He contended that even the cheque payments were made in the month of August and Sept 2011 when the registry was done in the favour of M/s. Agrawal Buildcon. This, further establishes the nexus that only agreement was done on 27.11.2010 but the entire payment was made only in Aug. and Sept. 2011 after receiving the amount from M/s. Agrawal Buildcon. Ld. Counsel for the assessee submitted that the assessee had no intention to hold that land. No registry was done in the favour of the assessee. Land was not diverted by the assessee. The assessee is a builder, and had he intended to purchase the land by his own funds, he would have purchased the land, registered in his name, and developed it and earned substantially. But the same was not done, as the assessee intended to pocket immediately by getting involved in the land transaction. Ld. Counsel for the assessee submitted that the department could not establish by any evidence whatsoever that payment was made fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also unsubstantiated as majority of the payment by the assessee to Smt. Rekha bai and others was made in Aug- Sept 2011, when the registry was done in the favour of M/s. Agrawal Buildcon. Further, the department could not support their case with any positive evidence to prove that the contention of the assessee is wrong. Thus, in these circumstances, we are left with only option to rely on the evidences on record. The agreement dated 27.11.2010 provides the details of date-wise consideration to be paid. Further, the bank account of the sellers are also important to find when the cash was deposited therein. Ld. Counsel for the assessee has submitted a chart at page 13 of his submissions: Amount payable as per agreement Amount deposited as per alleged Bank statement A.Y By 27.11.2010 ₹ 10,00,000 On 27.11.2010 ₹ 8,00,000 2011-12 By 10.12.2010 ₹ 40,00,000 On 10.12.2010 On 16.12.2010 ₹ 27,00,000 ₹ 10,00,000 2011-12 2011-12 By 10.04.2011 ₹ 50,00,000 On 31.03.2011 On 15- 18.04.2011 ₹ 29,99,000 ₹ 24,70,000 2011-12 2012-13 By 10.08.2011 ₹ 4,03,00,000 In Aug Sept 2011 In Aug Sept 2011 (Cheque portion) In Sept 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,39,401 (₹ 1,12,27,401 - ₹ 9,88,000) is hereby deleted. 30. In the result Ground no. 4 of the assessee is partly allowed against the total addition of ₹ 1,02,39,401/- and addition of ₹ 9,88,000/- stands confirmed. 31. Now we take up Ground No. 5 of assessee's appeal relating to addition of ₹ 9,12,600/- on account of commission on sale of land. Ld. Counsel for the assessee fairly conceded that the assessee had already offered the additional commission income, this ground was not pressed. We therefore dismiss this ground as not pressed. 32. Ground No. 6 is general in nature and therefore no separate adjudication for same is called for. Ground No. 7 relates to initiation of interest and penalty. Same is dismissed as consequential. 33. Now we take up IT(SS)A 679/ Ind/ 2016 for A.Y. 2011-12 in the case of Pradeep Hirani. There is a delay of 3 days in filing the appeal. In the application for Condonation it has been submitted that the delay occurred as the connected appeals of Pradeep Sharma were heard together by the Ld. CIT(A). The said order of Ld. CIT(A) was received in the case of assessee on 18.04.2016, whereas the order in the case of another ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining the penalty order, which is bad in law, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case liable to be annulled. 2. The Ld. CIT(A) did not provide proper opportunity of being heard, and therefore the order passed by the Ld. CIT(A) deserves to be set-aside. 3. The Ld. CIT(A) erred in confirming the penalty of ₹ 5,10,000/-, ₹ 13,50,000/-, ₹ 10,50,000/-, ₹ 19,10,000/-, ₹ 9,75,000/-, ₹ 14,75,000/-, & ₹ 37,60,000/- u/s 271(1)(c) for Assessment Years 2006-07 to 2012-13 respectively. The appellant craves leave to add, amend or to modify any ground(s) of appeal. 39. During the course of hearing, Ld. Counsel for the assessee submitted that the penalty u/s. 271(1)(c) is not leviable. He submitted that the penalty is levied for following additions:- A.Y. Appeal No. ITA Basis of Penalty Penalty Amount Quantum Appeal Status PB 2006-07 645/IND/2017 Disallowance of deduction u/s. 80IB(10) 5,10,000 CIT(A) confirmed the disallowance. - 2007-08 646/IND/2017 ----same ---- 13,50,000 Pending before Hon'ble High Court. PB 1-2 2008-09 647/IND/2017 ----same ---- 10,50,000 -----s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion certificate was not satisfied, but it will not mean that the assessee has claimed incorrect or false deduction. Mere non-satisfaction of a condition of deductions will not mean that the assessee has furnished incorrect return, which will make it liable for penalty." 42. We respectfully following the above judgment which is squarely applicable on the facts and issues of the case before us hold that the penalty u/s. 271(1)(c) is liable to be deleted in the present case for the A.Y. 2006-07 to A.Y. 2010-11. The appeal of the assessee for A.Y. 2006-07 to A.Y. 2010-11 is hereby allowed. 43. In respect of penalty for A.Y. 2011-12, covered in appeal No. ITA 650/ Ind/ 2017, since we have already quashed the assessment u/s. 153C r/w section 143(3), the penalty order is also not sustainable and the same is hereby quashed. 44. In respect of penalty for A.Y. 2012-13 in ITA No. 651/ Ind/ 2017, Ld. Counsel for the assessee relied on his submissions as made in the quantum proceedings. Ld. Counsel for the revenue contended that the penalty may kindly be confirmed. 45. We have considered the rival contentions and the impugned penalty levied on the addition of ₹ 1,12,27,401/-. while d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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